Well, I guess I'm not sure. when i select the play list i want to listen to, i can either click on the name of the song that i wish to hear or push 'shuffle'. if i push the shuffle button the ipod will automatically start to play the songs in a shuffled order. if i select a song, it will play that title and then the next one on the list. if the songs would appear in non-shuffled order then i could just choose the first song and then let them play through. but the list of songs is shuffled even though in ITunes when i look at the playlist they are in order by name.....
I was also having the same issue, but I think I found a solution. This works for my Smart Playlists.
In you Smart Playlist in iTunes, make sure the Album column is hilighted. (sort by Album)
Right Click on the Smart Playlist you are working with in the column on the left and select Edit Smart Playlist.
Edit the second row to read "Limit to 100 items selected by Album.
Resync your iPod. (make sure your iPod is not on the playlist you are editing).