Okay - As promised, my IPod classic is now gathering dust.
I purchased a 64gb Lexar USB flash drive from Staples for $14.99 (on sale this week).
I followed the excellent instructions of Asteele and set up the 2 folders on the flash drive (Music and Playlists). Under the music folder I have my sub-folders with the artist names (and one named "Sountracks"), and in these Sub-folders I copied the folders with my Albums. I have 8 folders (Albums) under The Kinks alone.
I use MP3Tag to properly tag all files with artwork, etc AND to re-name the mp3 files with track numbers in their names.
I rarely use playlists, but if I need a playlist (to play songs across different albums), no sweat - - just use the free program "Playlist Creator" ver. 3.6.2. It allowed me to create a playlist with songs on my flash drive from multiple album folders, and it saved an M3U file in my "Playlist" folder.
I tested it, and everything works fine with my Sync 3!
So, for $15 and an hour or so - say goodbye to the IPod. No need to use ITunes. Just use Windows Explorer to transfer the files to the flash drive, and the other free programs mentioned above to properly Tag files and create playlists (not so important - at least to me).