these points have all already been raised with technics. the easiest way to convert to 7k format is to drag to and from song manager, taking out non-used file types options. You will save a LOT of space compared to 5000 format. I only copy 20 files to a folder because my originals are all in 6X00 format and 20 easily fit on a floppy. You would be much better off converting to 7k format first and then copying, you won't have to do all the file moving on the sd card. Besides 5000 format will use up all your space unnecessarily. I also renamed everything with a hex editor in the kn7000mn.inf file, the long file names display perfectly. I did most of the work on the 8MB card, backed it up, wiped it, and carried on with new files. Then merged the backups and restored all the files to a much bigger card when I had seen how much space I needed and bought one.
used space on the card is different whatever method you use to look at it, if you try various methods in windows they give different results. I have not seen this problem, have you tried scandisk on the card? Try backing it up, formatting it in the 7k and then restoring it?