Unable to create a new playlist on Itunes when in "On My IPhone " mode. New playlist shows as greyed out. Why?

Before the recent update on Itunes, I was able to create new playlists and drag music diretly into saved playlist folders from my laptop. Now, I can't do either because when in the what's on " my Iphone" mode, trying to creat a playlist is impossible because it is greyed out. I can no longer drag and drop music into saved playlist showing on my phone. What's going on Apple? or anyone.

Csound1 wrote:
Don't press the option key, instead hold down the command and R keys, if recovery is present that will take you there.
Thanks for this suggestion, but I have already tried that. The only way for me to boot my mac is by starting in single user mode and mounting the drive, then exiting from there. Nothing else will work, I cannot press Command-R, so this will not work.
Thank you both for your suggestions as well. I found your help useful and it will help me solve this :-)
I have ended up buying a Flash Drive, and will now download the Mountain Lion installer. I assume that I will be able to boot from this, and then use Disk Utility to format the drive, and later on install Mac OSX Mountain Lion on it?
Thanks Again.

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