diff --git a/installer.nim b/installer.nim
index 91ff350..d832d70 100644
--- a/installer.nim
+++ b/installer.nim
@@ -34,11 +34,11 @@ proc dependExists(name: string, verRange: PVersionRange): Bool =
                          nimVer & " " & $verRange)
     else: return True
   else:
-    for kind, path in walkDir(getBabelDir() / "lib"):
-      if kind == pcDir:
-        var dir = path.extractFilename()
-        if dir == name:
-          var conf   = parseBabel(path / dir.addFileExt(".babel"))
+    for kind, path in walkDir(getBabelDir() / "packages"):
+      if kind == pcFile:
+        var file = path.extractFilename()
+        if file == name.addFileExt("babel"):
+          var conf   = parseBabel(path)
           var verRet = conf.verify()
           if verRet == "":
             if withinRange(newVersion(conf.version), verRange):
@@ -83,7 +83,7 @@ proc copyFiles(proj: TProject) =
   # files listed in proj.modules and proj.files and the .babel file.
   var babelDir = getBabelDir()
 
-  var dirs = @[babelDir, babelDir / "lib", babelDir / "bin"]
+  var dirs = @[babelDir, babelDir / "lib", babelDir / "bin", babelDir / "packages"]
 
   if proj.library:
     # TODO: How will we handle multiple versions?
@@ -92,19 +92,21 @@ proc copyFiles(proj: TProject) =
     createDirs(dirs)
     # Copy the files
     for i in items(proj.modules):
-      stdout.write("Copying " & i.addFileExt("nim") & "...")
-      copyFile(i.addFileExt("nim"), projDir / i.addFileExt("nim"))
+      var file = proj.confDir / i.addFileExt("nim")
+      stdout.write("Copying " & file & "...")
+      copyFile(file, projDir / i.addFileExt("nim"))
       echo(" Done!")
     if proj.files.len > 0:
       for i in items(proj.files):
-        stdout.write("Copying " & i.addFileExt("nim") & "...")
-        copyFile(i, projDir / i)
+        var file = proj.confDir / i
+        stdout.write("Copying " & file & "...")
+        copyFile(file, projDir / i)
         echo(" Done!")      
 
-    # Copy the .babel file.
-    var babelFile = proj.name.addFileExt("babel")
+    # Copy the .babel file into the packages folder.
+    var babelFile = proj.confDir / proj.name.addFileExt("babel")
     stdout.write("Copying " & babelFile & "...")
-    copyFile(babelFile, projDir / babelFile)
+    copyFile(babelFile, babelDir / "packages" / babelFile)
     echo(" Done!")
 
   elif proj.executable:
@@ -141,10 +143,10 @@ proc install*(name: string, filename: string = "") =
   else:
     echo("All dependencies verified!")
 
-  echo("Installing " & name & "...")
+  echo("Installing " & babelFile.name & "...")
   babelFile.copyFiles()
 
-  echo("Package " & name & " successfully installed.")
+  echo("Package " & babelFile.name & " successfully installed.")
 
 when isMainModule:
   install(paramStr(1))
diff --git a/parser.nim b/parser.nim
index 86eed11..ae19768 100644
--- a/parser.nim
+++ b/parser.nim
@@ -1,4 +1,4 @@
-import parsecfg, streams, strutils
+import parsecfg, streams, strutils, os
 
 type
   TProject* = object
@@ -20,6 +20,8 @@ type
 
     unknownFields*: seq[string] # TODO:
     
+    confDir*: string # Directory of the babel file, "" if current work dir.
+
   EParseErr* = object of EInvalidValue
 
 proc initProj(): TProject =
@@ -36,9 +38,12 @@ proc initProj(): TProject =
   result.depends = @[]
   result.modules = @[]
   result.files   = @[]
-  
+  result.exeFile = ""
+
   result.unknownFields = @[]
 
+  result.confDir = ""
+
 proc parseList(s: string): seq[string] =
   result = @[]  
   var many = s.split({',', ';'})
@@ -51,6 +56,8 @@ proc parseErr(p: TCfgParser, msg: string) =
 
 proc parseBabel*(file: string): TProject =
   result = initProj()
+  result.confDir = splitFile(file).dir
+
   var f = newFileStream(file, fmRead)
   if f != nil:
     var p: TCfgParser
diff --git a/readme.markdown b/readme.markdown
index 971b67c..bbf3676 100644
--- a/readme.markdown
+++ b/readme.markdown
@@ -1,11 +1,13 @@
 # Babel
 Babel is a work in progress package manager for Nimrod.
 
-##Babel's folder structure
+## Babel's folder structure
 Babel stores everything that has been installed in ~/.babel on Unix systems and 
 in your $home/babel on Windows. Libraries are installed in lib/ in folders
-which names contain both the name and version of the package, the folders
+which names contain the name of the package, the folders
 contain the modules and any other files that the package wished to install.
+Applications are installed into bin/. There is also a packages/ directory which
+contains all the packages' .babel files.
 
 ## Contribution
 If you would like to help, feel free to fork and make any additions you see