This is fixed (for Ogg Vorbis) in the forthcoming 1.20 release of the Karma firmware.
Oh, this is very good news ! thanks!

Flac has always played back gaplessly when I've tried it: what encoder did you use? Have you tried using Rio Music Manager itself to encode Flac?
No, I used what I thought was the standard FLAC encoder found at this page. I haven't tried to encode via RMM. I didn't think this was necessary. Is it ?
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Riocar 80gig S/N : 010101580 red
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