There appears to be a really annoying buglet (OK I made buglet up) in Windows Media Player (WMP) 12 whereby music files cannot be synced and converted to an external device such as an MP3 player or USB drive. Syncing works but if you attempt to have higher bit rate files converted to say 192kbps, it fails. The "convert to" data rate is available and can be set but it has no effect if the device does not support the Media Transfer Protocol (MTP). Windows phones do support MTP so they can have content automatically converted and synced. "Dumb" devices (almost all) that do not support MTP will not be able to get content automatically converted.
The following thread discusses in more detail.
http://social.technet.microsoft.com/Forums/en-US/w7itpromedia/thread/3089b0ec-5858-408c-9c7e-18edc2b34232
