I am owned by several dogs and cats. I have been playing non-computer roleplaying games for almost five decades. I am interested in all kinds of gadgets, particularly knives, flashlights, and pens.
I use option #1. Each instance of KeePass maintains a local file, but updates them automatically whenever it opens or closes. I also back up the file to my personal server automatically, so I have a copy even if the cloud service fails for some reason.
This setup has been serving me well for a long time.
I have a small UPS to keep my fiber and router working for a while and I have a larger UPS for my server. Even the larger UPS will only keep the server going for maybe half-an-hour, but most outages here are short. For me, the most important benefit is that my UPS will tell my server to shutdown when it begins to get short of power. Graceful shutdowns remove the risk of corruption and data loss.
If you need to add more than one drive you should look at external enclosures. There are 4-drive models just over $100 and 8-drive models just over $200. You connect them with eSata, USB 3, or USB C, depending on the enclosure.
I don’t know if this will help, but I’ve been using Plex to manage my music and other audio for more than a decade. It pulls in metadata from online sources and allows me to search or apply filters. That is a lot more versatile than anything I could do directly with the files.
If you aren’t interested in running your own server, look at some of the more sophisticated player apps. Many of them can provide similar metadata features. Then you wouldn’t have to worry about how the files are physically organized.