See the last few posts in this thread. A fix is coming.
http://mediamonkey.com/forum/viewtopic.php?f=12&t=65031

MediaMonkey 4, currently 4.0.3.1476, no longer syncs with Sansa Fuze. Frustrating.

I think some of the default settings may have changed on the 'upgrade' to the newest version. Lord knows I've been losing 'settings' nearly every time I 'upgrade'.

Try making the following settings to the playlist generation for your device and see if it helps. This worked for me on my Ford SYNC car and without these changes, the playlists weren't working...

Using MediaMonkey, under the portable device's options...
Set PLAYLIST options to do the following...

CHECK "Force relative paths"
UNCHECK "Use Unicode (UTF-8 encoding) for M3U playlists"
CHECK "Use extended M3U" (only seems to add a header line, not the actual details)
UNCHECK "Use Linux folder separator ('/' instead of '\')"

Doesn't work for me either. So frustrating that WMP can sync all my devices fine but my library is managed more through MM and it can't synch my sansa or android devices.

Since the upgrade to version 4 MM will no longer sync playlists to my wife's Sanza Fuze. It sends them as .m3u, which the player won't read. Previous versions used to send .pla.

Now, there's another complication. We've also put a micro SD card into the player. Could this be part of the problem? But even if I remove the card, MM still sends the playlists in the wrong format. What can we do?