The short answer -- no, I don't think there's a fix. Despite the fact that the unit is supposedly "Made for iPod," I don't think Pioneer's genius programmers managed to figure out that iPod/iTunes has a "Sort Artist" field for people who want (ex:) Jimi Hendrix filed under "H" for Hendrix, and not "J" for Jimi, and who don't want him listed as "Hendrix, Jimi". I suppose you can't blame Pioneer, though--that feature was only added in what, iTunes 6.0? <sarcasm>
I was having the same problem as you - X920BT, 5000 or so songs in my iTunes library, but getting "Not Found" for 3/4 of the alphabet keys (including really common letters like "R" and "S"). As an experiment, I went into iTunes, selected my ENTIRE library (yes, that's EVERY song I own), clicked "Get Info," checked the boxes next to "Sort Artist," "Sort Album," and "Sort Album Artist", and deleted the information in each text box. (In other words, I deleted the Sort Artist, Sort Album, and Sort Album Artist information for *every* song in my library). After that was done, I synced my iPod, then took it and connected it to the unit. Every alphabet key now works, except I have to press "J" to find Jimi Hendrix (instead of "H"), "S" to find Stevie Ray Vaughan (instead of "V"), etc. And, of course, my whole iTunes library is now sorted by first name.
The really weird thing is that the "Sort Artist" bug screws up even seemingly unaffected letters. For example, I tried going back and re-inputting some of my "Sort Artist" data, thinking that maybe just one or two artists were the trouble. I got through the "A"s (Alan Jackson, etc.) no problem. After doing the "B"s, however, the "U" alphabet key stopped working. I don't have ANY artists whose first name begins with B, but whose last name begins with "U" -- why should (in effect) switching "Bruce Springsteen" to "Springsteen, Bruce" stop me from finding "U2"?
The other weird thing is that the "Sort Artist" bug doesn't seem to affect bands with "The" ("The Doors," "The Beatles," etc.) After clearing out all of the "Sort Artist" data, I expected that all of my "The _______" artists would be sorted under "T" in iTunes. Not so--"The Doors" were still under "D," "The Beatles" under "B," and so on. It appears that iTunes automatically recognizes "The ______" bands, and automatically puts the "Sort Artist" info in, even if you delete it. Even stranger, that DOESN'T seem to affect the Pioneer--pressing the alphabet "B" key gets me "The Beatles".
I've been really disappointed with the bugs, glitches, and seemingly poor quality control of this unit. I also have a Pioneer home theatre receivers, and it's just as buggy and unintuitive. I'm stuck with both of them for the next few years, but when time and $$$ present themselves, I'm dropping Pioneer like a bad habit.