Here's what works for me using MediaMonkey:
1. Create your playlist on the PC in MediaMonkey (I use the "Tree" view to browse my media, and you'll need the Tree view later)
2. Connect your Hero to the PC and Mount the SD card; Hero will show up in the MM Tree view as a "Removable Disk" with a drive letter
3. In the Tree view, go to the playlist that you want to put on your Hero
4. Right click on the playlist, select the "Send To" option; select the drive letter corresponding to your Hero from the list
5. Playlist is created on the Hero, and all files are copied
6. Unmount your Hero, and the Playlist now shows up in the media player app
This copies all the track info and album art that you have associated with your songs... I've never done anything with lyrics, so I'm not sure about that part of your question.
Hope this helps!
- I also use the "right click - Send To" method to create my Playlists in MediaMonkey, rather than drag/drop... just a preference thing.