It doesnt crossfade it all it always hangs like a second or two before it hits the next track i have it set to 2.2 seconds of overlap so it defintly should be working lol.

is crossfading turned on?

EDIT: sorry, i just felt like saying that

lol yes its on because if its not on it doesnt let you move the slider. I'm not that stupid

try re-installing WMP

or if the songs you are trying to cross fade might have a long silent at the end of it?

I think, it could be a third party codec problem.

either a codec or just a disk access delay. are other apps trying to use the hdd at the same time?