Sounds like it’s mad about line ending format, or syntax.
You can make the server test the file by doing something like:
/opt/sbin/mt-daapd -p /opt/etc/mt-daapd/mt-daapd.conf
which will tell it to parse the playlists. If it gets errors, it should give (semi) helpful info about what and where.
That will probably get you somewhere.
For editing stuff that moves from windows to unix or vice versa, and if I’m stuck on a windows machine, like at work, I use pspad:
You can change from dos to unix line endings, and so easily unix text files without munging them.