It's a terrible interface, but it will work as the last poster provided.
It's easier if you create some playlists on your ipod with short names, b/c the stereo display in the Forester has limited characters.
You have to follow the hierarchy of selecting a playlist first, then artist, then album. To advance to a song within the selected playlist, use the up or down arrows on the steering wheel (or turn the tuner dial on the stereo to advance the track).
To choose your playlist: push 2, then PTY/CAT, then up or down to select the playlist you want. You can stop here and let the playlist play and advance through the tracks using tuner knob.
Or to choose an artist, push 3, then PTY/CAT, then up or down arrows.
You can stop here and let all the tracks by that artist play,
Or to narrow it down by album, push 4, then PTY/CAT, then up or down arrows to choose the album.
It's confusing. Give it a day or 2 and you'll get it.