Playlist folder not showing songs from all child playlists
I had this happen to me for the second time recently. I just fixed it!
I thought I looked up a fix the first time, which I haven't been able to find.
However this is what I did just now.

I copied the name of the playlist to the clipboard,
then I simply deleted the whole playlist (for me this was fine because it was one of MANY playlists in the folder, this one only having one song in it).

Created a new playlist in the folder, pasted the name in, then added the song to the playlist! Pop! It showed up in the folder now!

For you, I would probably drag all the songs to a new playlist outside of the folder, delete the playlist inside the folder, then either re-create the original playlist by creating another one in the folder and dragging all the songs from the 'backup' (outside the folder), or perhaps try dragging the 'backup' back into the folder straight away.

*you could also try using the "New Playlist from Selection" function (command-shift-n) (under the file menu) (assuming Mac Platform).

I of course can't try any of these other methods until I encounter this problem again.

PLEASE NOTE: deleting the SONG from the playlist and then adding it again had NO EFFECT. The reference to the playlist itself seems to be the problem/bug.

I'm running v10.5 (141), but this happened on an older version as well.