Itunes 12.1.1 music not transferring on Iphone 5?

I recently downloaded Itunes version 12.1.1 because when I would plug in my Iphone 5 to my Itunes to add new music, the older version was no longer compatible.

However, now when I try to transfer music onto my Iphone, 2 things happen:

1- On Itunes it shows that the music has transferred on my phone (I have it on manual transfer), however when I open my music folder on the actual Iphone device, only certain songs are showing (ones bought from Itunes, about 50 out of the 1000 songs on my phone)

2- The songs on my device on Itunes either show up gray with the dotted circle, or black, but when I click on them, an exclamation point shows up. However, when I play the songs in my Itunes library (not on the device library) the songs play perfectly fine with no exclamation point.

Does anyone know what is wrong with my Itunes/Iphone and how to fix this issue?