Bobniborg,
I assume the Z: drive is another PC. So that mirrors my Media PC setup. I have the subfolders for artists and albums as well.
I have not used iTunes for playslists, but I was using playlists from Windows Media Player. I converted those to .m3u files as other posts suggested and in other threads.
Where I lose you is the import aspect. Are you saying the TV Live unit imports playlists? I do not remember seeing that folder with that option available. Please explain this more. Specifically, the “third button down” part.
