Hello Bach Pham
Thank you - yes, after looking at the html source of the rendered page I realized the extension mp3 is provided by the module. However, that is with the field "Data type" set to "Read in Playlists", which I now realize is what I should select. Making that change from the setting "Read in Folder" solves and explains issues 2 and 3.
There was a reason I had Data type set to "Read in folder", even though it is wrong. It is because with it set to "Read in Playlists" I was (and still am) getting a bunch of undefined variable errors in the file default.php at line 380 - one error for each line of the list.
The undefined variable error at line 380 is filename. I will try initializing it with a null value and see if that helps.
I have encountered a number of issues of that kind in working with various Joomla extensions. They often seem to be related to upgrades in php. The version of php I am using is 5.6.23. But I don't know if that explains this particular hiccup.
Regarding issue 1 (unwanted text cleanup)...
I found that I can use phpMyAdmin to edit the playlists parameter of the JO Audio Player table row in the Modules table, and put the characters back in that were taken out by the module in its text cleanup. These include things like apostrophes and foreign language characters, such as é in the French word thé. This is a workaround for issue 1, but hardly a good solution.
Thanks again.
Richard