I have the PE770 too. I downloaded a lot of freebies when I got the machine and I did the following.
When I see the file on the computer (picture) I transfer the picture to a word document. I catagorize the pictures, such as flowers, animals., etc. I also divide these again, such as roses, tulips, and if I don't know what flower it is, in a general file, such as misc. flowers. I number all my individual files (1,2,3 etc) and use that number underneath my picture. Also the size and stitch count, etc. When the page is filled up, (I get about 9 picture with info on one page),I print them out and put them into a binder. I like to do that, because sometimes I want to take my picture book with me and I don't always take my computer. I use the same number for each corresponding embroidery file. So, when I want to look for something, I don't have to go through all my files,but only through the catagory I need.
I do back up my files on a USB stick. I can open and see my files with Wilcom (free) and it is a lot clearer than on the PE770. When I want to embroider lets say #52 flower, I transfer the file to a clean (not my back up one) USB stick and put that one in my machine. Now I don't have to try to figure out, if I have the correct one. The PE770 viewer is not great. When I am done, I erase the file from my stick and put on only the ones I want to work with. Hope you can make sense out of my babbeling.