After many attempts I discovered by setting the rules in each Smart list to: 'playlist ...is...Music'
followed by 'limited to 25 items selected by 'Most Recently Added' (for example) the list synced
correctly to the iPod touch.
Thanks, Dave! I'm amazed that a customer was able to figure this out.
I added "playlist is not music" and "limit to 35 items" selected by "most recently added" and my podcast playlist now syncs to my iPod Touch (2nd) in the correct order without having to turn on / off "live updating" every time I want to sync my podcast smart playlist.
I'm disappointed that Apple has not been able to fix this bug (despite having announced that they had) after nearly a month. Does Apple not understand the issue? Think their customers are morons? Not care? Or what? By not communicating with customers, Apple lets customers reach their own conclusions....