You shouldn't need to use the DMS tools any more. You are updated on that side of things, and everything is set to go.
If you plan on using PhatHack MM, I would do the following:
1. Right-click on the DMS device in PhatHack MM and choose 'Reset Device Database'
2. When prompted, choose to import the contents of the DMS.
Now I have to remember how this bit works. Because there are two prompts for the DMS. One for importing the media using existing playlists (which I suspect you don't have which is causing your original problem) and one for generally importing the media and optionally automatically creating playlists.
So, I think say 'No' to the first question, and 'Yes' to the second.
3. Set the import type to either be 'ID3' or 'Media Center style'
If you are confident most of your tracks are correctly tagged with Album names then ID3 will be fine. If not, Media Center style could be best to cope with the separation of 'Discs' within an album.
Ensure the option 'Automatically Create Playlists' has 'Album' selected.
The DMS contents should then be imported, and new playlists generated for you automatically.
4. Right-click on the DMS and Save / Eject, this should prepare the DMS for PhatBox operation correctly.
Try the DMS out in the car, and let's see if you are any further!