I haven't tried it personally either , but the official word from FiiO is that the X5 do exactly as you describe in folder browsing mode. One exception is that for cards formatted in NTFS it can "only" read up to 2000 files per folder whereas for FAT32 it can read up to 65536 files per folder.
Yeah that's why I indicated depends on the filesystem also. Well that's good enough workaround for me! I will be browsing mostly using folder view anyway. What a relief! :)