After selecting the Create Entry for Existing Playlist option, you will be asked to edit and configure the Playlist Entry (below)

After configuring the Playlist Settings (above) you will be presented with the assembled Playlist entry (see below).

To insert this entry into an existing Playlist, open the xml file with WordPad (DO NOT USE NOTEPAD) and, after clicking the COPY button above, which transfers the entry onto your PC's Clipboard, simply Paste (Ctrl+v) the Playlist entry into the Playlist, following an existing </track> tag.

Finally upload your Playlist xml file onto the web server, replacing the existing one of the same name.