BKKKPewsey wrote:
Interesting fact I noticed was if I restored the playlists using playlist backup, MM still couldn't see the playlists but the stock music player could,
however if I did another sync in MM (which resulted in the playlists downloading again the monkey then showed the old (restored) playlists resulting in the playlists being duplicated

My guess is that MMA isn't rescanning the media store, and this is what is causing this particular behavior - right after restoring the playlists, are you seeing the little spinning wheel in MMA indicating that it is checking? (Actually, it would be great if MMA had a mechanism that would allow users to trigger a rescan).
Still, a mystery is what is causing the playlists to get deleted in the first place. If you hunt around these forums you'll see scattered reports of this happening, but I've also seen it on the PlayerPro forum, so it may not be MMA (in fact, if you search on "droid playlist disappear" lots of stuff comes up). Next time this happens, it might be worth using Playlist Backup to force a media scan. If that doesn't work, it might be worth unmounting and remounting the SD card.
One other tip is that I also use iSyncr, which very nicely has a setting that will allow you to see when the Android media scanner is running.
Jeff