I'm sure you know a lot more about how this works than I do, but it's my understanding that the memory playback switches are in there to satisfy people who believe that disk activity during playback is somehow going to degrade the audio quality. But that doesn't mean that when memory playback is turned off, MC is constantly reading the disk. It will eventually, during playback, fill a buffer and stop reading from the disk. If the sleep setting is aggressive enough, the drive can go to sleep before MC decides it needs to get more data. My explanation may be wrong, but I can certainly tell you that I was bothered by this problem until I changed the default sleep setting of my external HD. It will be interesting to hear how it gets resolved here.
Most of the recent developments to Memory Playback are indeed about placating audiophiles and their crazy beliefs.
I find that very frustrating, as there are improvements which could be made to Memory Playback that would have
actual benefits to playback; i.e. preventing slow disk/network access having any effect on playback whatsoever.
As it is just now:
If Memory Playback is disabled, there's a constant low amount of disk activity during playback - so the drive shouldn't be able to sleep.
Since it is being streamed from the drive directly, it's possible for playback to be interrupted if something else is accessing that disk at the same time, if it is badly fragmented, or for a number of other reasons.
Enabling Memory Playback completely eliminates disk activity during most audio playback, with a couple of exceptions for things like SACD ISO, depending on how you have it configured.
If the drive is aggressive about sleeping, it's possible that it can go to sleep when Memory Playback is enabled if its sleep time is less than the length of the track being played.
The prebuffering setting in Media Center adjusts how much time it has to wake the drive and load the next track into memory, and can be anything from 2-20 seconds.
For many external drives though, 20 seconds is not enough time to wake up, and will mean that playback is not gapless if it can't load the track into memory in time.
And it's not as easy as extending that from 20 seconds to something like 60 seconds, as you have no control over playback during that time.
That's why it would be ideal if Memory Playback kept multiple tracks queued up in advance.
Unfortunately the "load full album into memory" option does not work as you might hope.
If I recall correctly, it will load up to 30 tracks into memory. But if you have one more than that in your playlist, it reverts to loading all tracks directly from the disk.
All ≤30 tracks must be loaded into memory before playback can begin, so it can delay playback for several minutes.
This approach is not memory efficient either, and if those 30 tracks go over a certain amount of RAM, it reverts to playing back directly from the disk. But it will only do that
after you have waited for those 30 tracks to be loaded into memory first.
This is why I recommend the "Load full file (not decoded) into memory" option. It's the only sensible option of the three.