For your users
C:\Users\<USER>\AppData\Roaming\Microsoft\Windows\Start Menu
For all users
C:\ProgramData\Microsoft\Windows\Start Menu
Some shortcuts will be in one and not the other so you may want to set them all.
You can also just drag and drop things in order, but you will need to make a slight change.
Right click an empty spot of the taskbar and select Properties(RED).
Under the tab Start Menu select Customize...(Blue)
Scroll down and remove the check from Sort All Programs menu by name(Orange)
Hit OK then Apply.
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From here, you will be able to drag and drop things as you like(just like in XP).
In some cases you can get a duplicate folder name. Some people just copy ALL folders to the all users or user folder to avoid this since you may have a folder in each location with the same name.
I personally used to keep it all nice on Windows XP, but since Vista/7 have a very fast start search, i just use that now.
Be warned, dropping a folder into another folder in the star menu it self will reorder everything, so do that first or else it will mess up the order.