1. In Logitech Media Server settings notice where the folder for playlists is located.
2. In MC playlists right click on the playlist/smartlist you want to use with Squeezebox and choose Export Playlist. Save the playlist as a M3U playlist in the folder you noticed in 1 above. Repeat for each playlist you want to use with Squeezbox.
Post again if the playlists do not work on your Squeezebox Touch.