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Is there a way to make separate folders for these on the iphone? It seems that when picking a text tone, it shows all ring tones and vice versa

You can't unfortunately, just do what I have done and add sms before your tone name for example it would be "sms predator roar.m4r" that way they are all organized together.
 
all tones are created equal :D

Just add a suffix _SMS or the like. That's how I organise all the sounds in ToneRack, TR_ as the prefix and then _SMS , _NewMail etc for the suffix.

Makes sorting and organising a breeze.
 
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