This is for all the folk who have troubles displaying iTunes playlists (on a Windows pc) onto their media player.
Within the Twonky configuration you need to share both the directory holding the iTunesMUsicLibrary.xml AND the music directory (defined in iTunes). If like me you wish to store the music on the non system disc, then this will be two directories to share. Also to be safe I enable Windows sharing on both directories. It now works.
Lastly to configure the menus, you need to change the menu options to Custom, then save and restart the server. Then you can rename the menu options in the config.
I still don't know all about Twonky, but at least this will help somebody, as nobody has posted the solution before in the above terms.