http://www.foobar2000.com/?page=ReleaseNotes&version=096
Installing in portable mode only extracts the installer content and creates additional files that tell foobar2000 to store any configuration data in its installation folder as well as not to alter the Windows registry. Note that it is not possible to edit file type associations with foobar2000 when using portable mode, as that would require changes in the registry.
Note that 0.9.6 is in beta and that 0.9.5.6 is the latest stable version at this time.
I'm using 0.9.6 beta 2, but I have not tested the fpl playlists (I don't have much need for portable apps anymore, so I'm not moving my apps around to different drive letters). I will note, however, that the installer seems to work with UAC (installing in portable mode can be done by anyone; standard mode triggers a UAC prompt).
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Even if you're not using the apps portably, portable apps can still be very useful. Everything (program + settings) is in one place, making backing up your apps in preparation for an OS reinstall or such child's play.
Couldn't field test, but a quick hex view of the new foobar's playlists reveals that it's still storing absolute paths. This could be something to suggest to the developers before 0.9.6 gets released...