I"m sure there are others out there like me, that have been frustrated with maintaining playlists on the Droid phone. I am a person that likes to manage their own music. I don't let iTunes or Media Center manage it for me. I have all my mp3 files in folders in my music folder, and I create my own playlists based upon those folders.
When I first got my droid, I found it a pain to get playlists to work correctly. I tried using Media Player and Media Link, and just was frustrated with the things both devices did wrong. So I found my own solution, and it's simple.
Before doing the following, I recommend "killing" the music app if it's running. If you don't know how to do this, power off your droid and back on. The instructions below assume that you know how to use your Windows PC beyond just a basic user.
1. Do a search for "pls creator". If you used the search engine I did (The #1 search engine) then the first link should be something like "Winamp playlist creator". It's free. Download it and extract it on your system.
2. Clear off any existing playlists off of your Droid. If you don't do this, you end up with duplicates that are blank.
3. Plug your Droid into your PC.
4. On the droid, pick to Mount
5. On the PC, open the drive lettter of the Droid.
6. Copy all the music to your Droid. I suggest putting it in a folder named "Music" or something. If you've tried to use Media Player or Media Link, you should cleanup the old stuff first.
7. Lauch the pc3.exe program from wherever you put the Playlist Creator.
8. IMPORTANT: Change these options in Settings:
Playlist Details - Saving Playlist Entries: Absolute, without drive
Extended Information - Write extended information: Checked
Extended Information - Readout data from tags (slow): Unchecked
9. Exit the settings.
10. On the main UI, change the save location to the drive letter of your droid, and into a folder called Playlists. I put mine under \music\playlists
11. Add a folder/files to your playlist. Type in the name, and pick "pls" as the file type.
12. Clear Create Playlist.
Repeat steps 11-12 for all the playlists you may want.
When done, eject the droid using the windows manager, then pick to unmount on the droid.
Launch the music app, and go to playlists. It will take a few minutes for it to refresh with the new playlists.