I do have Import iTunes Playlists enabled.
The iTunes xml was located within a directory on the Mac itself. See below:
The music was stored on an attached Promise Pegasus device. Here is what the old storage directory looks like:
I’ve moved the music subfolders to Internal Storage on the Nucleus. Here is what the new storage directory looks like:
At this point, if the old playlists that are problematic were based on iTunes, is it easier just to rebuild without reference to iTunes?