Got it:

C:\Program Files(x86)\Common Files\Autodesk Shared\Materials\Textures\3\Mats\

Narlee,
A better approach is to put all of your files on the network, and then use AdditionalRenderAppearancePaths= in the Revit INI to point to these resources. This way everyone has access to the new files (no chance of two people rendering and getting radically different results), and a Revit Update that writes over the local folder doesn't destroy your files. And I do this even as a sole proprietor, because it makes it really easy to roll out the next version of Revit, just get the INI right and everything works.

Also, for what it is worth, i tested the hell out of the three different sizes of material texture files. Could not get Revit to show ANY performance difference. So for my own textures I do one file only, and I make the file as big as it needs to be. So a slightly textured paint might be a fairly small file, while a highly textured carpet is, well, whatever I get from the carpet manufacturers web site. Maybe 3DS max actually takes advantage of the varied files, but Revit, so far as I can tell, does not.

Gordon