OK... as far as I can work out :

1. The menu is, as you suspect, only two layers deep. This is not too much of a problem, as if you have an artist with two or more albums, all tracks are displayed on the screen together. In order to change artist, you have to return to the top screen and click on 'PLAY SELECTION'. This then takes you back to the second level of the menu screens, where you click on 'TRACK LIST' to bring up the tracks.

It is still advisable to manage your iPod playlists properly, as it's easier to select from a few playlists, and then skip through the tracks that you don't want to listen to that day. The display seems to grab 30 items at a time, so if you are accessing a long list, you have to wait a couple of seconds while the unit grabs the next 30 and so on. A bit of a pain if you are trying to scroll to 'T' in your alphabetical list of artists. That said, I have 7000 songs on my iPod, and the adapter works for me. Certainly far better than changing CD's, and I can play stuff that I have downloaded from iTunes Music Store, which I can't do on a regular MP3 disc.


2. I'm not absolutely certain on your second question, but I imagine that this is an analogue input. I don't think that the PCM is doing the decoding from MP3. In terms of software on the iPod, I'm told that the adapter is software-upgradeable via the iPod, but I have no more info right now. All I know is that there were problems with earlier software versions, which have apparently been ironed out by upgrades.

Hope this helps.