I've noticed a lot of people complaining about the default music player sorting songs in the incorrect order, album, naming, etc. I just got my Droid a few days and was having the same problem. After messing around a while with some things, I found the solution. I personally have my albums in their own folders within the "mp3" folder on the SD card. This allows me to keep track of my music better, as well as fix the problem easier. I'm using Windows 7, but the process should be very similar across XP and Vista.
What you'll want to do is navigate to the folder containing the music to the particular album or song you wish to fix. Select all of the songs in that album, go to properties, this will bring up a multiple-file properties box. Make sure you are only selecting multiple music files, and not any other associated files like album art or anything. The properties window has a "General" and a "Details" tab at the top. Go to Details. There will be sub-categories such as Description, Media, Audio, etc. Only Description and Media are important.
First thing, click "Remove Properties and Personal Information" near the bottom of this screen, at the top of the new window click "Remove the following properties from this file:", check mark everything listed in the Media sub-category then hit OK. Sometimes the files will not let you simply over-write the existing entries, so this is the easiest way to avoid that. Back at the Details tab, put the artist name in both "Contributing Artists" and "Album Artist", making sure they are the exact same. Under "Album" simply put the name of the album. If you wish to have the album year and genre, go ahead and edit those fields. Hit apply and this will fix the incorrect/multiple album listing and artist issue.
For the song ordering issues or "Unknown Title" issues, you have to edit each song individually. Again just right click the individual song, go to properties, Details, then type the name of that particular song, as well as its play number in the album under "Title" and "#" respectively. Again hit apply, and everything should now be correct.
Also, the file names do NOT have to be labeled "01" "02" "03" etc for sorting to work on your phone, nor does the "Title" field under the properties need to either. Only the "#" field needs to be numbered, with "1" "2" "3" etc, no "0's" are needed before single digits.
Cheers.