Late answer, but posting for others who might have a similar problem.
I had a similar challenge but had the restriction of not being able to use FileSystemObject. Therefore, I wrote a Class library that makes heavy use of the Dir() function to parse all the files and folders in a specified directory. It requires you to set no references to additional libraries in the VBA IDE.
You can use it like this:
Sub PrintFilesAndFolders(Directory As DirectoryManager, Optional indent As String)
'Helper method
Dim folder As DirectoryManager
Dim file As DirectoryManager
Dim newIndent As String
For Each folder In Directory.Folders
Debug.Print indent & "+ " & folder.Name
newIndent = indent & " "
PrintFilesAndFolders folder, newIndent
Next folder
For Each file In Directory.Files
Debug.Print indent & "- " & file.Name
Next file
End Sub
Sub LoopThroughAllFilesAndFolders()
Dim dm As DirectoryManager
Set dm = New DirectoryManager
dm.Path = ThisWorkbook.Path & "\Sample Data Set"
PrintFilesAndFolders dm
End Sub
In the helper function, you can substitute the file.Name with file.Path, and instead of Debug.Print just write the output to your target workbook cell.
As far as watching for files changing on the system, I don't know of a way for Excel to automatically do that. At best, I think you would be able to write a script that runs when the workbook starts up to go reparse all the folders and files again and repopulate the workbook.