[K_User]

Does the Smart Playlist rely on the library

Yes, exclusively.

Thanks for clearing that up.

For anyone with library turned off looking for an easy way to create a playlist which is always up to date is to make it on the fly:

• Select the group folder you want to play and then long press the OK button on the remote to bring up the context menu.
  
• Pick Play. That'll create a temporary playlist which lists all playable files in the folder, including in any subfolders.
  
• You can organize and navigate this playlist like any other.
  

Note: Just create a new temporary playlist the next time. The only downside is that you can't turn temporary playlists into a channel. If you save them, they'll just be normal playlists that don't update.