Hi Tim,
I also have a USB stick with music on it as FLAC both for quality purposes, my preference for the iDrive user interface to Carplay, and as a backup since the discontinuation of the "Music collection" function by BMW.
For the playlist issue; have you looked at this thread:
https://x3.xbimmers.com/forums/showthread.php?t=1816048
I know it is iDrive 7 but most of the time the requirements for file types etc. are the same.
For the cache, the head unit makes a cache based on the USB drive's name. If you change that iDrive will recognize it as a different USB and rechache everything on it. As far as I remember it had a cache of around 40000 songs before it recache's same drive. That is why people also recommend using several USB sticks to do that. I for one just rotate through several USB names on the same drive as I correct metadata etc. which in turn enables me to see the corrections immediately.
Let me know if you have any more questions, hopefully, this was helpful to you.
Omer