You're right. WMP11 came with Vista, but you might check your computer just to be sure. Did you do the Vista SP1?
Personally, I am still scared to upgrade my Vista. I still have 3.321 on it. I know I can always revert to 3.4, but then I would also have a problem with Playlists, so I am going to try to fix all my playlists first.
As for people walking out on your Saturday night - how rude!
Was everything else working except the Playlist you had already created? If so, they would have only had to wait an extra minute each for you to re-add their songs when they came up to sing. What was their reason for just walking out?