I had a stock that I picked up when it was like $3 a share. I bought one share because I figured, what the hell, why not.

They went out of business. The stock is now $0. Actually, $0.0001.Well, close enough.
So I was going through my account, and I thought, can I buy all the stocks? So I looked at it, and I don't know if I can get them all, but for $25 (the cash in my portfolio at the moment) I can get a lot.

Where does that money go, if the company is folded?

I would think you can only buy stock if someone else is selling that stock. Otherwise you'll put in an unfillable order.

Not sure I understand your question but I will try.  If you buy the stock of a company that is not issuing new shares, aka secondary offering, the money goes to  stockholder(s) that sold the shares.  In your example, the company is probably in bankruptcy court.  Any buyers are hoping that there will be some thing left over after all the creditors are paid.  The bondholders might be accumulating shares cheap to make their case look better.
Really, it is no different than buying stock in a healthy company most of the time.  Though the risk/reward ratio is probably very different.

Lets say you spend your $25.   ..Or $250,000.  

That money goes to the person who sold the stock.

Now you have the Stock, (the stock isn’t money.)

If the company goes bankrupt, the stock becomes worthless.  (Except in very rare instances).

A stock is only worth whatever the bigger fool is willing to pay for it.  

Shares of profitable companies can be considered to have an intrinsic value based on Earnings and dividends such.   That’s what you need to look for when considering stocks.

Penny stocks are not that.    You will lose what little money you have, trading them.

I don't completely agree with this.  While I think it is good for most of a portfolio to be invested in such stocks, there are plenty of stocks out there without the earnings and dividends to qualify under your theory which will perform extremely well.  
Re-reading OPs headline, some one might sell you a ton of stock for a very small amount of money for several reasons.  One big one is to recognize the loss for tax purposes.  Another is they are disgusted and want to get out at whatever price they can get.  Odds of success are low for the purchaser, but potential gains may be high.  Unless you are an expert at vulture investing, probably best to avoid that area.  Of course, the only way to become an expert at vulture investing is to actually do it.  Wayne Rogers proved that you can change from being an actor to an investor, and he did a lot of vulture investing.

You can't buy all of it as most won't be for sale.

In the end, you won't find a buyer and you'll just lose your money.