What is your setup for DLNA servers (how many, which profile are you using?)
You could try removing all DLNA servers and adding just the generic profile.
What format is the music in your library?
I just verified PP working. Picked MC as the server, the iTouch as the renderer, browsed audio, selected an album, selected the first item in the PP's generated playlist and it went on to play the whole album.
PP has adjustable settings, there is a "ignore stop commands" setting which had no effect set on or off.
In webplay, the stuff you select is presented to the iDevice as a m3u playlist. I did the same as for PP, selected an album and hit play. It played all of the songs in the album.
If you still can't get it to work, perhaps you have a network/wifi issue. For example, I was running openwrt on my WRT54GL until I discovered it wasn't stable with the 2.6 kernel (I was getting dropouts of the wifi). When I backed it off to the 2.4 kernel it worked fine.