var %m3u = $line(@filelist,N) <- should be -> var %m3u = $line(@filelist,0)


Code:
alias RemoveM3u {
  var %i = 1
  while $line(@filelist,%i) {
    if $regex($ifmatch,/\.mp3$|\.ogg$/) { dline @filelist %i | did -d player 8 %i }
    else inc %i
  }
}