UPDATE:
Just thought I would give an update after playing with it for a couple of hours. There are definitely some major bugs in XBMP 2.4 when dealing with MP3's. It doesn't matter if you are listing 3000 songs or 30 songs. There are certain MP3's that XBMP simply will not list properly. With or without ID3's turned on, it doesn't matter.
My work around was to create my playlists on the computer using WinAMP, modify them to point to "smb://" instead of "c:music" or whatever. Then upload them to the xbox. XBMP will then play them with no problem which I found very weird.
In other words, XBMP will lock solid when I try to list a directory with 1500+ mp3's in it but if I create a playlist for that entire directory on my computer, then upload that playlist to the xbox, then XBMP will let me browse up and down through those 1500 songs all day long. So I can browse a 1500 song playlist but not a 1500 song directory.
Weird but the work around is fine for me. Oh yes, this is running over my network in case anyone is wondering. The playlists point to songs on my computer, not the xbox hd.
I really wish someone would write a standalone MP3 player for the xbox, like WinAMP. How about WinAMPx or xAMP! ;-)