Thanks for the tips! I finally figured it out and am now adding songs to yyz.m3u.
The trick was finding the "Playlist" directory. I thought I had to create it, but it was already there in my file list alphabetically. I was then able to go to yyz.m3u, push copy, and then go to playlist and push paste.
Now I'm able to go to a song, push navi long, choose playlist catalog, add to playlist, choose the only one there "yyz.m3u" and the song is added. Sweet. It's a slow process, but it works.