Yes. I am sure there are many ways to get it to work. What worked for me was to be sure to map the iPod to be "E:\" as it can otherwise be finicky. I also made sure I never let iTunes open with it connected after factory resetting it to new. I connected it for the first time with MC open, and things were fairly straightforward from there. If you go to Tools, Options, Handhelds (with iPod connected) you should see the options for syncing your playlists. If you have any issues with it not as the E: drive, I would make that the first step to try.
When I let my library grow past my 160GB iPod and let MC do the truncating it offered to, there was no room on the iPod as expected, but it also showed as having no music at all rather than the 150GB of CDs it had before I let it go over 160--so careful with that. I'm right at the cusp now, so just deleted some rips that had errors and am now resyncing after another re-initializing with just a GB or so free. I have a post asking how to select only certain songs to sync. If everything you want to sync is only in playlists, it will be easy for you. Here is the FAQ in case helpful:
http://wiki.JRiver.com/index.php/Sync.
I hope you have some nice headphones and listen to lossless rips for best enjoyment. Happy listening!