In the Arduino IDE, click on File -> Preferences, look at the "Sketchbook location:" at the top. It will look something similar to this (C:\Users\admin\Documents\Arduino) Inside that directory is where you put your libraries folder, and inside that libraries folder is where you put new libraries. So in the example case above, your libraries folder would go in C:\Users\admin\Documents\Arduino\LIBRARIES. The libraries directory under the Arduino-1.0 is NOT where you put new libraries.