I'd say the behavior you're experiencing is not normal. It's usually a problem file or a problem with the program that makes one want to pull out healthy hair.
My other issue with library 'files' instead of folders is that if the file were to become corrupt, then you just lost your entire library!
One way to quickly switch over (not including work to re-path palettes) to library folder is to go through the library file and WBLOCK all your blocks out using the BLOCK definition option. (
NOT selected OBJECTS!)
Again, don't know for sure if this will fix your problem you're having right now, but just helping so you can test a different way of working.