Ok I did this and it worked in my Library, but is it possible to have my playlists organized the same way? For instance, I made an A Perfect Circle playlist. Why can't that be with the P's instead of the A's in the playlist node?

As I said it's currently only working for Artists. Support for other fields has been requested earlier and is on the wishlist.

Note that you can add any "prefix" you want to the list (comma separated). But the prefix needs to be followed by a space in the Artist name for it to work.
I.e. you can fix [i]A Flock of Seagulls[/i] but not [i](((Sounder)))[/i].

All this will hopefully be supported in a future version of MM.

Currently it can be done for Artists only. Go to Tools->Options->Library->Appearance and select "Ignore prefixes when sorting by Artist"

I'd also like to know the answer to this question. It has always bothered me but I've begun to learn to live with it.

Ü is another thing that doesn't do what I want it to.