It took me a while, but I finally verified the 400 album limit.

 

Despite the folder configuration there is indeed a 400 album limit. (Just like it says in the manual)

 

When you try add album #401 you will get a message saying that it cannot record because the playlist has been filled.

 

I already verified the 400 artist limit a while ago. You can continue adding albums after you reach the 400 artist limit, but the new artist will not show up in your list. (The artist will still display when you play the album)

To be honest, thats more than I ever need. IDK, I guess other people like to keep music in their HDD for longer time than I do.

 

I just keep my all time favorites and delete the rest after I get sick of listening to it.