I _THINK_ that the pb is reindexing the contents of the music folders, categorizing the various tunes by genre, album, artist etc. But who knows what goes on inside the bowels of these things.
You can only create one playlist (for some reason only known to the guy at rim with limited music tastes) on the pb. We can only hope that they fix this or someone comes up with a 3rd party app that lets us read through our music and create additional playlists on the device.
I create playlists using my computer referencing the pb as a drive.