I was experiencing the same issues described by everyone in this thread and was able to solve it by going into the playback settings on the iphone in the spotify app and disabling the "hide unplayable songs" preference. The local files would then show up in my playlists but were still unavailable to be played until I downloaded the playlist.
I am experiencing the same thing. Says my files are unable to play. I hit download and it just says waiting to download forever. I would love to keep subscribing to spotify but i mean I do not want to have to re-search for all my music library already on my computer. There should be an easy way to drag and drop so I can keep the music sorted all in my spotify app. Hopefully they fix this or they will be losing my business.
Launch Spotify on your device and head to library. Tap settings on the top right of your device, then go to “Playback”. You should see an option to “Hide Unplayable Songs” turn that off. Once you turn that off head to your playlist and you should see your local file songs. Follow instructions if they need to be properly synced, the tutorial should show if you press on one of the unplayable songs.
I was struggling with the same problem but once I logged out and logged in (and even updated) my spotify on my MAC just like some magic suddenly my previously unavailable local files got downloaded as well into my playlist and now I can play them.