Windows Phone app for Desktop: "We couldn’t find your Podcasts library, but you can create a new one using Windows Explorer, and we’ll use that."

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Solution:  Create a new Library.

 

Library must be named “Podcasts”

Library must be of type “Music”

 

To change library type:

1.
Right click library
in Explorer 2.
Choose Properties 3.
In Library
tab change Optimize this library for to Music

 

Hat Tip to Peter Jausovec and Hein Htat. Thanks!