In Lumia 525 I am unable to set MP3 ringtone. I connected my cell with my laptop by it did not shown any ringtone+sound folder. It shows only ringtone folder which is created in my music library.
From Nokia's faqs
On the start screen, swipe left, tap Settings > ringtones+sounds, select the type of ringtone or alert you want to change, and select the sound.
If you have an mp3 file of a song on your PC, you can make it your ringtone.
- Connect your phone to your PC, and use the file manager of your PC to move the song you want to use as a ringtone to the ringtone folder in your phone.
To set the song as your ringtone, in the ringtones+sounds view, tap Ringtone, and under Custom, tap the song.
You can use a song as your ringtone if it's not protected with digital rights management (DRM), and it’s smaller than 30 MB.
Your PC must have Windows Vista, Windows 7, or Windows 8.
Also you can watch this video.