[Eye in the sky]

Seems to have stopped working with proxy enabled.

Looks like you're in 'Stream Only' in which case XBMC will fetch the songs using its own proxy settings.
Try changing 'Track Handling' option to 'Cache Only'

That did the trick, thanks.

Spoken too soon, with 'cache Only', every song plays for a few seconds and then starts all over again.
Now I'm back to 'Stream Only' and it's working again.

This is really strange.