ok, you said your firmware is current. I'm assuming then that you did go on the Sandisk site and downloaded the firmware updater.
http://www.sandisk.com/Retail/Default.aspx?CatID=1376

There's alot more available on Sandisk's website to help you.

Try Sansa's support page of their how-to videos.
http://www.sandisk.com/Retail/Default.aspx?CatID=1468
Scroll down that list and it has videos on working with the player in all sorts of ways: MSC and MTP modes, Windows Media Player 10 and 11, Rhapsody, Napster, and Yahoo Music Services.
(MTP means Media Transfer Protocol, which basically means using Windows Media Player, and MSC means Mass Storage Compliance, which means opening Windows Explorer to drag-and-drop files into folders like any portable storage device.)

You should be able to make playlists and load songs pretty easily in Windows Media Player. Have you updated to Media Player 11? In spite of all the negative things said about Media Player, I find it works rather well with the Sansa (I have a c250).

I don't bother with playlists much myself; I have a tendency to listen to music in "album" format, but I have made a few lists.

Try the videos under "Windows Media Player 11" (or 10 or you're running that) "Adding music to your Sansa MP3 player using Windows Media Player 11 (or 10)" and "Adding a playlist to your Sansa MP3 player in MTP mode using Windows Media Player 11 (or 10)" to "walk you through" the process.

Hope this helps!

xarophti