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Hi
m3u is definitely the correct playlist format for usb drives. From memory on my drive I have a folder called "music" with the folders for the artists inside as well as the playlists in m3u format. I created my playlist in Windows Media Player and did a "save as" directly to the music folder on the drive.
The "List" indicator on the stereo does take a few minutes to come on each time I start up, although it does remember to use the list it was on last.
Hope this helps
PS. I do not have iDrive and just the std stereo on my 2009 E93
PPS. My old 2007 E93 with USB was useless until they upgraded the Progman software for the whole car [After a year of me complainig about the USB], that would nearly always forget where it was and start from the begining every time I started
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