I've had a lot of trouble with the car recognizing playlists, finally i worked out what is going wrong. The scanning of USB sticks is a three stage process
A) discover all directories and files
B) read each file and extract the tag information from each file
C) read playlists (m3u files)
Only once stage B is started can you search by artist/album. Until then you can search by folder only. The manual explains this point although does not distinguish between the phases.
I have a USB stick with about 15,000 tracks on it and it was stuck in phase A. I know this because I have directory structure artist/album and then tracks for each album in one folder. Via search by folder I could see that at the start of the alphabet the album directories were visible but halfway through artist "Putumayo" the album subdirectories didn't appear. Phase A stuck at this stage for over a week. Nothing alphabetically after this point showed album subdirectories. If I deleted the album the indexing stopped at then the next album (alphabetically) would be indexed but then it stopped after that one. So it was a limit on the number of tracks, not some bad characters in one particular filename or length of a filename.
The answer to the car sticking at stage A lay in the explanation in the manual about USB sticks
Information from up to four USB devices or for approx. 36,000 tracks can be stored in the vehicle.
If a fifth device is connected or if more than 36,000 tracks are stored, information on existing music tracks may be deleted.
With my USB stick the amount of files (15,000) was supposedly well under the 36,000 limit but this wasn't the first time I'd tried to play music. So I suspected the other stored USB data was using up some of the possible 36,000 track memory and reading of the 15,000 tracks stopped when the maximum limit (36,000) was reached.
To test this
I got some other USB sticks with one track on each and put them in one by one, allowing the player to start playing the first and only track. Then I put the problematic 15,000 track USB stick back in. Almost immediately I could see that more album directories were being recognized in the stage A where it had stuck before. After half an hour driving it was on to stage B and soon all artists were listed if you search by artist.
So it seems that
if your car already knows one USB stick with say 26,000 tracks on it, then if you swap to another USB stick with 15,000 tracks, then it will stick at the 10,000 track mark (total has reached 36,000) and will ignore the directories and tracks after that point. It will never successfully index your new stick of 15,000 tracks. You need to make it forget the original 26,000 USB stick. Since the car doesn't tell you what is going on it could even be that you buy a used car and your first USB stick doesn't work because of what the previous owner did!