I'm sorry...I just don't know what's going on with your files. My files show with their extension (mp3 or m4a for example) in the library and also in my saved folder. I've never had to go through any of that rigmarole of adding to a playlist, save as etc. People do have problems with m3u files but it's usually when they're trying to add files to burn, or add to an mp3 player. In those cases, people are usually trying to add from a playlist, rather than adding from their saved folder. The only time I see an m3u file is within a playlist. Have you tried using your computer's search to look for mp3 files?
Other people don't seem to be having quite the same problem as you, which is possibly why your instructions aren't included in any help files.

But your post might help anyone else who's having the same problem that you were.

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