I don't know if you're still having problems with this, but I recently experienced a problem with the Media Library as well. I recently ripped all my CDs to WMA with WMP on my local machine. Then, I moved the resultant WMAs to my server on a shared folder and deleted the ones on the local machine. When I started WMP, the Media Library would load with the location of the deleted files (because they were entered into the Library when the CDs were ripped), and recreate the folder where I had ripped the files (without subdirectories and WMA files). If I tried to delete all the entries in the Library manually, WMP would crash after 5-10 albums (I had ripped about 500 albums). I tried over and over again to clear the Library by deleting, monitoring the folder WMP created for changes (since there was nothing in there, I thought it would erase the Library entries...it didn't), and letting the "All Music" playlist play and not find the files. Most of these solutions would work for awhile, then WMP would crash, and all the entries would return in the Library. :| :| :|
This drove me nuts for a day, and I couldn't find
ANY instances of similar WMP behavior or a way to clear the Library on the web!
Finally, after searching around on my system, I found the location of the files that control entries in the Library. They are located in C:\Documents and Settings\~user you are logged in as~\Local Settings\Application Data\Microsoft\Media Player
Deleting the files called CurrentDatabase_59R and wmpfolders will reset the Library and the files will be recreated by WMP when you restart it!
After that initial headache, I must say that I am thrilled with WMP9 and the Media Library. I haven't found a better way yet to rip, manage, and listen to a large music collection.