I couldn't tell you about the sound quality because I had my dealer install the mp3 player as soon as I picked up my car in February. However, I am asssuming that the quality will be just about on par with any other mp3 player on the market and it would depend on the codec and/or compression rate used on the tracks.
Fortunately, the mp3 player will read CD-RW discs as well as discs that are burned using folders and ID3 tags. Unfortunately, the ID3 information will not automatically scroll across the LCD screen, you'll have to use the bottom left knob to do that for you. Also, the ID3 information will not show up on the entire LCD screen, the left side is taken up by the clock and the right side is taken up by the disabled auto-climate control readout.