Sorry for the confusion guys, my communication time with FiiO headquarters are somewhat limited by circumstances these days and I only got hold of the actual method for generating external playlists for the X5 today.
Here's the general instructions:
1. As mentioned before, mount the SD card on your PC (e.g. via the X5's storage mode) and import the songs you want playlisted from the SD card to a new list on your player of choice.
2. Export the playlist to an M3U or M3U8 file ON YOUR COMPUTER
(e.g. your desktop), not the SD card. This will force the generated playlist to contain full absolute paths for each song as well as a drive letter reference.
3. Open the M3U file in a text editor.
4. If an "#EXTM3U" line is not seen at the top of the file, add it. (without the quotes)
5. Replace all drive letter references (say, "X:") with "TF1:" if the card is to be placed in X5's slot 1, or "TF2:" if in slot 2. (this can be done using a "replace all" action on your text editor)
6. Save the modified file anywhere you like on the card (anywhere where you think it will be easy to find the playlist, e.g. in the root directory or in the same directory where most of the songs themselves are found. Since absolute paths are used the X5 obviously doesn't care where you put them)
I understand that this might not be the answer you guys may have been waiting for and I've told them as much, but hey, this is just the first beta for this feature so I'm keeping my hopes up.