Help for Reorganizing how I store Media for PSE 2025 on my new Mac

After decades of  using PSE due to the size of my library I need to change where I store my files. Of course moving all files to an external, which I should have done yrs ago (old school). I am starting with a blank slate on PSE 2025 with a new Mac M4. I not sure what are the right questions to ask. Do I need to have PSE installed on the drive which I will be using? How do I designate watched folders? Do I need to move, or copy, my entire "pictures" folder to the external? And how do I deal with "Photos", do I combine it with "Pictures"?  I have a recent Catalog BU (1TB) on the drive. Hoping that I have given the right amount of info for best suggestions on my best step forward. Sorry for the can of worms. Thank you for your patience and consideration.