I just purchased an m260 and use it primarily with Rhapsody to go, and it has been working well. I have used WMP 10 to load songs that I own onto it. Can you maybe create a playlist on WMP10? The key for me was updating all of the ID tags to all my songs.
Also you can download the Rhapsody software for free and maybe you can try to manage your songs that way.
Hope that helps.
After talking to 4 different tech support guru's one of them finally tells me that you cannot create a playlist from your own cd collection. Playlist will only work if using a supported online subscription. What a crock!