`ln -s` creates a symlink inside an existing folder instead of failing

Since your primary aim is to have a combined view of your local and external Music folder, I think a union mount via overlayfs could be used, especially if the files are not being written to.

The basic command is, in older kernel versions (<3.18):

mount -t overlayfs -o lowerdir=/read/only/directory,upperdir=/writeable/directory overlayfs /mount/point

For example:

$ ls Documents
374620-63301.pdf        My Kindle Content   scan0005.jpg
BPMN2_0_Poster_EN.pdf   scan0003.jpg        StrongDC++
$ ls devel
cse           ossec     ubuntu-14.04-desktop-amd64-ssh.iso
nexus         scripts   zsh-syntax-highlighting
$ sudo mount -t overlayfs -o lowerdir=$PWD/Documents,upperdir=$PWD/devel overlayfs ~/Documents
$ ls Documents
374620-63301.pdf        scan0003.jpg           
BPMN2_0_Poster_EN.pdf   scan0005.jpg    
cse                     scripts
My Kindle Content       StrongDC++
nexus                   ubuntu-14.04-desktop-amd64-ssh.iso
ossec                   zsh-syntax-highlighting

One drawback is the need for sudo, which can perhaps be taken care of using a careful NOPASSWD rule.

In light of Jason's blog post, the mount command for newer kernels changes to using overlay as the filesystem, instead of overlayfs, and using an additional workdir. The kernel documentation now codifies this:

At mount time, the two directories given as mount options "lowerdir" and "upperdir" are combined into a merged directory:

mount -t overlay overlay -olowerdir=/lower,upperdir=/upper,\
  workdir=/work /merged

The "workdir" needs to be an empty directory on the same filesystem as upperdir.

This isn't possible to do automatically -- Unix provides no facility for symlinks to dynamically change. However, you can have a program in the background that updates the symlink using inotify and the fact that later files sort as being later with LC_COLLATE=C:

#!/bin/bash -e

export LC_COLLATE=C
shopt -s nullglob

base=/path

while inotifywait -e create \
                  -e moved_to \
                  -e moved_from \
                  -e close_write "$base" > /dev/null; do
    dirs=("$base"/dryrun-[0-9]*/)
    (( ${#dirs[@]} )) && ln -sfn -- "${dirs[-1]}" "$base"/latest
done

And here is the result of it running:

% mkdir dryrun-20200320_140935-138yuidx
% ls -l latest
lrwxrwxrwx 1 cdown cdown 39 Mar 20 16:40 latest -> /path/dryrun-20200320_140935-138yuidx/
% mkdir dryrun-20200320_141044-35pfvec6
% ls -l latest                         
lrwxrwxrwx 1 cdown cdown 39 Mar 20 16:40 latest -> /path/dryrun-20200320_141044-35pfvec6/