Can't View Zune Playlists on Xbox 360

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I had the same exact problem as the OP.  My resolution;

I went into the Settings and changed the default Audio folder under Collections. 

It was listed as c:\FOLDER\Zune\Subscription

I had to change it to c:\FOLDER\Zune

I had the same problem, I changed the Zune Network Service to run as my user as opposed to Network Services.

1. On your computer, click Control Panel,Administrative Tools, Services. If you are running Windows Vista, you can see Administrative Tools in the Classic View of Control Panel.
2. Right-click Zune Network Sharing Service, then click Properties.
3. Click the Log On tab, then type your user name and password in the boxes.
4. Restart the service.