how do you add custom ring tones to individual contacts?

Contacts ---> pick one and then hit the menu button and Options. Ringtone should come up. Let me know if that works

FWIW, I found a directory structure for your SD card that should be even more useful?

After plugging in your Droid to your PC, then use the notification pull down to mount your SD card on the Droid. Then, make these directories:

music
media/ringtones
media/notifications
media/alarms

There's more, but at least the above will allow you to use custom ringers and more important, Notifications (i.e. new mail/texts/MMS, etc.) alerts over and above the stock ones on the phone.

good luck