I just got this working perfectly and can't believe how easy it was once I worked it out. I tried to relocate my music library (the folder containing all my MP3 files) to another drive several times in the past and could never get MB running smoothly after the move, let alone my playlists. I'd spend hours in the MB library preferences, playing around with monitored folders, rescan all files etc, no luck.
The difference this time is I also moved the MB folder containing the .mbl file and the playlists folder. For some reason I thought that you would leave the MB folder on C drive where it automatically installs in the "My Music" folder, and point it towards your MP3 file folder on your other drive and MB would sort it out once you pointed it in the right direction.
The other thing is the difference between what I call my library and what MB refers to, which I've noticed is that I'm not the only one to get confused. MB library refers to the .mbl file in the MB folder in My Music
So, if you want to move your music file folder to another drive because your C drive isn't big enough, or like me you want it on a network drive to share with other PC's running MB, move your music file folder to the other drive, then move the MB folder from the My Music folder on C drive and put it in the same folder as where your music file folder is stored on the other drive (I just created another folder called "Music" and put them both in there). When you click on the MB shortcut on your desktop, direct it to the .mbl file in the MB folder that you relocated to the other drive.
I just did it on 2 PC's running MB, 5000 files and 16 playlists, no problem.
Just added a new MP3 file to my music library, showed up in MB on both PCs, added it to one of my playlists, showed up in the MB playlist on the other PC as well, perfect! I used to have to run a sync program every time I added new music files to my library to keep MP3 folder and MB up to date on 2nd PC.
Can't wait to set it up on my HTPC and have MB theater mode showing on 65" screen.