SW2009 not searching for missing files

I'm having a problem getting SW to search for files using myReferenced Documents locations set up in Options >> SystemsOptions >> File Locations.

I've got 4 locations set up for the ref'd docs (Library, Toolbox,Routing, and Grommets)
Search file locations for external references (Options >>Systems Options >> External References) is checked off

I purposely deleted a grommet from my assembly folder to see if SWwould search for it in the Grommet folder (which is actually insideof the Library folder). No matter what options I turn on/off orfile locations I specify, SW will not find the file in thespecified locations. It appears to not search those locations andis only using active RAM, current folder location, and the pop-upasking me to browse to find the file manually.

1) Is there something I am missing inorder to force SW to search the folder locations I specified?

2) Does the indexing function(Options >> Systems Options >> Search >> IndexingPerformance) write to a file that is then used by SW to find themissing file or is a search performed everytime a file ismissing?
SolidworksGeneral