I am able to search at two levels: the entire library, and the bottom-most folder in a hierarchy. If I search a folder that has, for example, two folders nested within it, I get no results (though I know the information is in one of those two folders). Is something amiss?
This is how it’s designed to work. To search the subfolders, too, select them along with the parent folder (by Shift- or Command-clicking) or create a smart folder to show the contents of the folder and all its subfolders.