iTunes does not update automatically. On a Mac you get a notification (in the Mac App Store) for updates, but I'm not familiar enough with Windows and iTunes to say whether you get a notification or not.
To check your current version, open iTunes, then select About iTunes in the first menu. Then go here.
http://www.apple.com/itunes/download/
It should auto-detect your OS and offer the correct version, but it it does not there will be a link to the Windows version on the left, about midway down the page.
On OS X, Apple handles files in the same folder kind of structure as Windows. The tools for browsing those folders are a bit different, but not greatly so. iOS, on the other hand, doesn't do folders, or more precisely, it limits an app's access to folders so that it can only see it's own resources and files. That will change somewhat with the introduction of iCloud Drive, later this or next month.
To change the Windows folder you are syncing, plug your iPad into the computer and select it in iTunes. Select the Photos sync options. To the right of the Sync checkbox there should be a choose box thing. You can change folders by interacting with it.
You can choose a folder with one level of subfolders. Only the first level of subfolders will sync. Each folder will become an album.
If you select the 'Selected Folders' option, you can choose which subfolders will be synced.
This screen shot will probably look a bit different, since it's from a Mac, but it should be close enough for reference. The oddness of the folders is because I no longer sync my photos through iTunes. I temporarily changed my settings for the screen shot.
