iCloud playlists can only contain songs from your iCloud music library.
With the many glitches and endless issues that are associated with iTunes Match, I'm happy that my subscription has finally expired. I would like to sever all ties with the service, however any time I try to add an existing song from my Library to one of my existing playlists - I get the above message followed by "If you continue, *Your Playlist* will be removed from iCloud and will only be available on this computer". This is exactly what I want! So I promptly click "Remove Playlist and Continue" thinking I won't ever see the message again (for that playlist at least) only to find the message continuously poping up every time I try to add any song to any playlist. How can I put an end to the madness?!
Thanks
-G
iMac, OS X Mountain Lion (10.8.2), 24", 3.06 GHz, 4GB 800MHz, 1TB