Does Amarok not do "normal" playlists at all, any more? Previously when I have installed and pointed at my music collection, it has picked up all my playlists (m3u) and given me the list to choose from. I have a directory for each album of mp3 & wma files that I have, with a playlist in m3u format in each directory.
Also, Amarok used to give me the ability to actually create these m3u files wherever I wanted on disk, but it now only seems to do playlists who knows where in xspf format..

Could you maybe start with telling us what exact Amarok version you are talking about?