There is no file extension for an empeg playlist - the empeg doesn't use "files" to store music (well, it does, but it's treated in a database sort of way). At the moment you can't prepare playlists without an empeg and the software, but we're planning to put m3u import facilities in when we've got time.
Building playlists is just a matter of dropping tunes in from either your local storage, or from other places in the empeg database (eg, other playlists, etc).
Unfortunately, as the entire database is stored on the unit NOT the PC (which is convenient if you dock your empeg with a friend's PC, you get to see *your* database, not theirs), emplode is rather boring and unfunctional without an empeg connected :)
Hugo