The "microSD1" is actually in dual brackets (can't use dual brackets symbol here posting...it will not show up in the reply)

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You are correct though, "microSD1" is a directory/folder.
The rockbox's internal playlist creator is fine but it takes much more time than creating a playlist using the computer with a playlist creator...drop, drag, press create, copy M3U to Sansa playlist folder (if the songs are already on the Sansa).
I guess editing the text of the playlist is a small extra step. It is a workaround solution that will still probably be much quicker than using rockbox's internal playlist creator. Thanks for the input on that one. It works like a charm.
Still looking for a single-step solution. If anyone has one, please let me know.