The local files media plays perfectly (through spotify) on laptop where they are stored.
I have a small number of mp3's that I have in 'local files' - and included in a a playlists (I use for business purposes). I only started having this issue after recent spotify updates and re-installs - noticed in the last week - but may have been from much earlier.
I'm having the same / similar problem with Local Music - and trying to sync them for offline use on mobile/other devices.