Seems to work better if files are in the same directory or maybe 2 directories deep.
It is weird because sometimes, some files that are several directories in will play, but then next time turn on PS3, it will see directory, but play no files. In the past, manually refreshing the media server would force it to work, but it is hit and miss.
Needs specific testing criteria to try and find trends - as mentioned earlier, I gave up on it and just read files straight off mapped drive instead.