>Does the directory and project structure need to match the namespace?

Absolutely not. Start out simple and just create two projects, one for your UI (forms) and another for your business objects. This is how Kevin's wizard sets things up.

You can even have multiple namespaces in a single cs file, were you so inclined. There need not be any relationship to the directories.

namespace NameSpace1
{
	public class TestClass{}
}

namespace NameSpace2
{
	public class TestClass2
	{
		public void Test()
		{
			NameSpace1.TestClass x = new NameSpace1.TestClass();
		}
	}
}