Now I'm glad you asked me about reading that. I completely misunderstood how auto update was supposed to work, and it is working correctly.
Change files, reboot, database updates, no need to initialize.
When I click on Update Now it says "Updating in the background."
So I would assume that if I leave it alone for a few minutes (there are only 3 directories with mp3s totaling about 1Gig) that the database would update. But it doesn't
But hey, I'm moving forward, I don't have to keep initializing the database!