Playlists partially broken after update to MM 4.0.2.1462

[threestar333]

OS: vista home premium sp2
MM version: 4.0.2.1462
Problem seems to have started after update from MM 3.2.4.1304 to 4.0.2.1462. After update all mp3 files in my playlists no longer appear in the playlist. MM can still find them by all other methods and plays the files fine but they do not appear in playlists. All mp3 files are in folders within a folder called "Lossy". At the same level there is a folder called "Lossless" containing folders full of .flac files. All these files still appear in the playlists and play fine. Not sure if the problem is caused by the file type or location. I have opened exported .m3u backups (which are not up to date) of some playlists and they still work as expected showing all files and playing correctly. I do not have .m3u backups of all playlists and the ones I do are mostly not up to date.
I renamed hilyard-MM.DB.Pre4 backup database file and reopened MM using that. After converting the DB to the new format exactly same problem remained. I am guessing there's a problem with the conversion to the new DB format.
Any suggestions much appreciated.
Thanks,
***

[Lowlander]

Are these static or Auto-Playlists? There should be no issue with Playlists during the upgrade, are you sure the files were on the Playlists in MediaMonkey 3 just prior to the upgrade?