Over the past several months I have been using a simple batch file to create m3u playlists for music subfolders in the main Music folder on my Clip Sport and in my micro SD. Here is one of the messages I posted on the SanDisk Forum.
This batch file method will also work on a Mac using Wine -> File Manager command.
( I could describe this easy method if anyone is interested.)
I thought it might be helpful for you if I attempted to convert your example text from your m3u file into the format created by the simple batch file. I am using the drive letter F that is used on my Mac for my Clip Sport. You can see this m3u format is really simple.
DriveLetter:\Music\Subfolder\Filename (This method will work with mutliple layers of subfolders)
F:\Music\Kill me heal me chicago\Boni Pueri - Come With Me Chicago Typewriter OST Part 5.mp3
F:\Music\Kill me heal me chicago\Kill me heal me OST Auditory hallucination - Jang Jae In ft Nashow.mp3
F:\Music\Kill me heal me chicago\Boni Pueri - Time Walk Chicago Typewriter OST Part 5.mp3
F:\Music\Kill me heal me chicago\Boni Pueri - Come With Me Chicago Typewriter OST Part 5.mp3
F:\Music\Kill me heal me chicago\Kill me heal me OST Auditory hallucination - Jang Jae In ft Nashow.mp3
F:\Music\Kill me heal me chicago\Boni Pueri - Time Walk Chicago Typewriter OST Part 5.mp3
Please write back and share your results.