I have a 32GB very low profile USB drive with over 3800 MP3 files on it that I generally have on "shuffle everything" and don't have any issues. The files have been mostly ripped from CDs at the highest bitrate available in whatever tool I'm using. With background noise and the like I don't sweat a bit of loss.

The USB drive is formatted FAT32.

 

Yep, I have the exact same set-up except sorted in folders and I don't use shuffle (and a few less than 3800 files!)
Not a single problem in eight years of usage.
Most important thing is make sure you format the USB as FAT32 and not NTFS.

 

i have just aquired a 2017 R coupe.having attempted to play music from a flash.drive unsucessfully i read this thread with basic disbelief.
So being demoralised with the stock system i thought i would jack around it.
i have plugged a Fiio btr5 into the usb port for power and connected its aux into the vehicles aux. The bt bulb (fiio btr5) is in car mode and powers on and off with the car. It connects with my phone when i power the car on it is set to audio only and the car bt is set to phone calls. I now however tramsmit music to my car via my bt bulb in loseless format. Oh the plus it has it own dac which is much better than the meridian built in one.

 

I have mine in folders too. There is "shuffle" and "shuffle all" and I use the latter most of the time. The randomness it not so random but I don't mind. It seems to move around in general areas of the filesystem. That is, once i hear a song from a particular artist/album I'll get others from there in the mix. There may be some technical reason there, perhaps having to do with filesystems, indexing, and some other boring factors. I only think of that because of my current profession, but that's just nerd curiosity.

Yes, FAT32, and I haven't tried anything bigger than 32GB. That's plenty big for any of my needs. I got a five-pack of them: One for each car, one for transferring pictures when I travel, and two more sitting on my desk waiting for something to do. They're so cheap now. My main criterium was not sticking far out of the socket. These only extend about 8mm, and I put a little ribbon in the loop that sticks up so they're easier to handle.

 

i listen to mostly flac and DSD files which are not compatible. I use a bt bulb for a high res dac and amp. My chooce was a Fiiio btr7 it has an app and you can.set it to car mode power on and off with power from the cars usb. It has dual dacs and a thx amp. It is incredibly clean. I connect it with an aux cord the sound is greatly improved and you use your phones bt to transmit you files at full quality.