Lobster, under Data path there should be NO other XML and ART folders. All mods out there use these too (basically). If you got any other too (like Audio etc), this doesnt matter a lot.
So, delete the current ones you might have (or back them up) and place what TR asks you.
If you'd like to wait, the newer version v2.1 (coming this Friday hopefully) will include an installer to make your life easier.
And no, the game won't die nor you hard disc will be formatted when you delete XML folders
. We do it all the time in our tests.