So... Just to make sure there is no confusion. There are basically three ways you can accomplish syncing Playlists to iTunes. Each works a bit differently and has different capabilities.
1. Using MC's built in Export to iTunes function:This is available via
File > Export to iTunes & iPhone. This writes directly to iTunes' database and allows you to export Playlists from MC into iTunes. However, it does not convert source files, so all files in the selected playlists must already be in an iTunes compatible format.
2. Using MC's Handheld Sync tool:You can set up any folder on your hard drive as a "virtual handheld" in MC, which will allow you to convert files on the fly to iTunes compatible formats (converting, for example, FLAC to ALAC or MP3). This tool can also export Playlists in a variety of formats. M3U files are a pretty simplistic "universal" format which iTunes supports.
iTunes will not automatically import the Playlists you exported, however, nor will it generally automatically import the files. You'll need to manually import the M3U files into iTunes (open them with iTunes). iTunes is somewhat dumb about importing relative paths, though, so you might need to use the full path option when exporting the M3U.
3. prod's MCiS tool:This is a tool that syncs between MC and iTunes (and the reverse) made by super-awesome user prod. It works very well and can handle updating existing playlists, handling alternate files (for files that are FLACs in MC but need to be MP3 or ALACs in iTunes) and a variety of other options. It also does not automatically convert files for you, but can be used alongside MC's Handheld Sync option, and can be fully automated. More details in prod's thread here:
https://yabb.jriver.com/interact/index.php?topic=51734.msg353066#msg353066Even better, this tool is now free and open source.