The "mission folder" in question is the folder that is created when you save a mission in the editor as a "user mission". It is seperate from the different mission folders where the .pbo files are located. This mission folder can be found in:

<myDocuments>\ArmA Other Profiles\<profilename>\missions

Inside that folder, you will see your "mission folder" that was created when you saved the mission in the editor. If it is a Sahrani mission it will end with .sara. If it is a Rahmadi only mission is will end with .intro. (e.g. MyMission.sara). None of these files will be end with .pbo

It is inside this folder (myMission.sara or whatever you named it) that you want to place your Description.ext file. This is also the folder where you will save your Briefing.html file and any scripts you might use in your mission.

If you open that folder, you should already see inside a file called mission.sqm. This file contains all the mission information you create in the editor and stores it in formatted code.

Basically, these are all the un-packed files that make up a mission and can be edited/previewed in the editor. When you are ready to export your mission for play in SP and MP mode, instead of saving as a "user mission", you save it as a multiplayer or singleplayer mission. ArmA then makes your mission folder (and all its contents) into a .pbo and stores it one of the appropriate locations for such files (different from where the mission folder is saved). (you can also PBO it yourself with a PBO tool but I like to do it in the editor)

Regarding your Description.ext, you may want to include a a little more information as sometimes a mission will fail to load without it. I am not sure exactly what is required and what can be omitted, but I would at least add the information as discussed in the "OnLoad" and "Header Class" sections of the Biki article just to be safe.

Good luck!