I wanted to report problems with local files in Spotify. I've seen similar reports about issues, but I thought I'd add info about my situation.
Spotify becomes unresponsive and/or freezes when folders are added/changed in "local files" via Preferences. When this happens, the music continues to play, but I'm unable to skip or switch playlists (in the last case, Spotify will be stuck at loading). I also noticed high CPU usage when this happens. The app doesn't seem to revert back to normal on its own, and closing it doesn't work as the process stil runs in the background (music continues to play). The process needs to be closed via task manager.
Also wanted to report a bug with local files not displaying correctly when using using filter/search to look for a specific song, and then going back to all local files. This is the screen you will see for a while, until Spotify desktop client catches up. I assume this means the app is refreshing the file list?