Everything is stored at the SD card ( / external memory) so there is no such thing as internal memory (*there is, but not what you can access. it is for firmware only) anyway. In short, yes. it read tag on external memory, though doesn't always organize / read those tag correctly. Therefore it is important to have music organized correctly in the first place . I am using Media Monkey to manage / sync my music and it does those things automatically.
Edited by ClieOS - 2/27/13 at 8:41pm