To confirm, that is a bug:

4a) If he'd moved the track from one playlist to another, then the reference should have been removed from the original playlist, and the track should not have been deleted along with the original playlist, regardless of whether the checkbox was checked.

4b) With the checkbox unchecked, the decision was made to leave the tracks on the player (in the mistaken assumption that soup would be coming soon).

4c) There ought to be a third option, for Unix-like semantics: remove it from this playlist, and if it's the last reference, remove it entirely.

As I recall, we couldn't make the confirmation dialog look nice, so we opted (in the interests of not confusing Rio Central customers -- Marketing told us to assume that they were less clueful than car player customers) to hide the third option.

This is excused (in the Rio Central case) because it does have soup.

And I never noticed, because I don't have my tracks in more than one place, so the behaviour with the checkbox checked is the Unix way, and I never uncheck it.