One of the reasons I purchased the WDTV Live Hub was to play iTunes playlists thru the Hub. Given that the Hub features an iTunes server, I figured this would be a cinch to implement. Well, as they say, “not so fast.” I experienced the same ‘file empty’ results as the OP. I tried converting iTunes playlists to Windows playlists, but ended up with the same results.
I tried Playlist Creator 3.6 ( http://www.oddgravity.de/contact.php) which apparently has been used successfully by some folks on the AVS forum. However, I was not able to load my audio files into the playlist (altho I could load video files).
Finally, I found iTunes Export ( http://www.ericdaugherty.com/dev/itunesexport/). It is very simple to use and iTunes playlists can be converted to HUB friendly playlists in just a few clicks. So far, this little application has worked like a gem.