Progress report:

Tried syncing many times always getting "3100 Rebuild databases returned an error: Connection timed out".

Also when power cycling the player it always does a database rebuild on bootup.

After the power cycle i connected again and this time it did a database rebuild without reporting errors.

I can make changes and sync, during the sync it rebuilds the database without error.

I'm able to delete files and playlists and sync, and the files seem to get deleted. I am now at "1260 Drive 0 size: 3910M, free: 86182K, used: 3826M (97%)"
The deleted playlists do indeed disappear from the empeg menu.

I tried to rename my "pear Jam" playlist again, and this time the connection time outs during database rebuild occured again. When i synced, it deleted a bunch of stuff that i deleted before the last sync, which seems strange. (output attached)

70% (more like 90% actually) of my files still say "invalid file format"