Yes, it all takes place within the VM room. In fact, the VM room is essentially an Assembly room for Vertex objects. It doesn't quite have the same functionality as the actual assembly room but pretty close. Regarding how Carrara decides what's a polymesh and what's not, I'm not sure. It would be nice to designate a new polymesh simiply by selection instead of the cut and paste method. Maybe in a future release of Carrara...