Configure the native music player app to never go outside of the phone for anything.
Reset the music DB for the native player using the tool on that same setup sheet.
Connect phone to the computer USB.
Navigate to the phone's local storage location. This method also works for SD storage inserted in the phone.
Create a new folder with a very recognizable name.
With a PC type tagging program that has a playlist creation function, "mp3tag" is what I use, customize the tag fields to be just the way you want them to be, with emphasis on "Title," "Artist," "Album," and "Track." When tagging is complete, on the PC create a playlist of the type "m3u" for the music you want to test.
When the playlist is complete open it in a text editor to make sure it does not specify a path to the music. If it does, you need to use a different playlist creator or reconfigure the one you have.
In the way most familiar to you copy the music and the m3u type playlist to the new folder under Music. Don't worry about sub-folders, the tags you edited will inform the native player. If you have album artwork copy that too.
Disconnect the phone in a safe way.
Open the native player and navigate to playlists.
Test the playlist.
My apologies to Jean Baptiste-Kempf, Rémi Denis-Courmont and all the developers and individuals who volunteer to create and support the VideoLAN software. Please understand that it appears to me that Windows Phone is a tiny niche in the cell phone market and it is relatively low on the development priority for every app maker. I know you make robust, flexible software for many platforms and I will continue to use it on those platforms. But the main thing I have found after many hours of trying to get VLC for Windows Phone Store to work the way I want is that unless I contribute to the development effort it will not work like it does on other platforms. I don't have any problem with that, and I hope you guys don't have any problem with the way I presented my solution. Keep up the good work.