Well, as far as the monitoring is concerned, there's an API to monitor a certain registry key for changes... and of course you can do a lot more if you'd write a WMP plugin, but that's another area...
You're right, names are NOT stored on the CD (unless it is MP3 CD), the're taken from the Internet (if your CD is legal, or perfect match of legal one)
But... For me it works even on CD's... Maybe because i have them in media library anyways
Yeah, neither Unicode nor MBCS (multi-byte character sets) are supported. In fact, I don't have any experience with it either. It'll be a Good Thing™ to learn though, so I'll start looking into it... can't promise when I get it done though