First we need to know whether you're using the injected iso method or the virtual sd card method.
If you're using the injected iso method, shown in the guide here on smashboards, then you would have to build the iso with the mods already in the project m folder. That way the files would be injected into the PM iso. You can't mod the injected iso, so you have to modify the folder before you build.
If you're using the virtual sd card method, you have to put the mod files in the project m folder before you inject it into the virtual sd card. That method is independent of the game, it depends on the virtual sd card.
Personally I recommend the injected iso method, although it may take a bit longer if you want to add mods because it takes awhile to build the iso. It's just like modding PM on the wii except you have to inject the projectm folder into the iso/virtual sd card.