When I type var mysql=require('mysql');, I get an error that mysql module is not found.
In which folder of node.js should MySQL be placed? Should the entire MySQL folder be placed?
I'm not quite sure what mysql folder you are talking about but I would recommend just using npm for this and letting it handle the installation of the package.
Simply go into the folder of your project and install the MySQL Module using npm install mysql.
You can read more about using and installing the MySQL Module here.