The "show previous songs" setting was changed from 5 to 0, once I did this, it got out of the rut of only choosing previously played songs. Crossfade no longer works, but now I'm getting a legitimate "shuffle" or crap-shoot if you will of songs from my library. (This truly makes me happy!) I changed the "show previous songs" back to 5 because I like the ability to go back and check what just played incase I'm not near my computer when the song is playing. I like to make a mental note of songs I like but haven't heard for awhile.
Anyway, for me, the bottom line is that party shuffle is working properly again selecting random songs from throughout my library--but I want the crossfade feature back for party shuffle. I have a wireless music bridge and during parties I send iTunes to my stereo via this bridge. I generally run iTunes on Party Shuffle and the results have been quite wonderful. However, dead space between songs is a downer! I liked crossfade--there was never silence!