Playlists

Fom what I can see the most music that the HD1K can play as a list without 
making a playlist file is one CD (an album).  Am I correct?  If not then how 
for example would I make it play all albums of an artist or a series of chosen 
albums?

If I wish to make playlists what format must they be in.  Will a text file 
consisting of a list of full path names to a bunch of music files work, or does 
there have to be other text/commands in the file.  I assume the extension of 
the text file would have to be M3U.

Any help appreciated.