Ah right, that's a side effect of XMPlay using the "oldschool" way of creating file dialogs, where the application has to tell the system in advance how much space it has available for filenames, and with that many files you will hit XMPlay's (or any other applications using that function) limit. If the files had shorter names, you'd be able to load a few more. If Ian wants to improve this, he could be using the IFileDialog COM interface on Windows Vista and newer instead, which doesn't have this limitation.
For the time being, if all those files are in the same folder, you can also right-click the "Add" button, which will open a folder picker instead of a file picker, so you can add a whole folder in one go instead of manually selecting all files in that folder. Yet another alternatively would be to drag&drop the files into XMPlay's playlist, which should also have no limitation regarding the number of files that can be dropped at once.