Just tried Freecfm.com. It doesn't seem to mind .m3u pointers. But I can't get music to stream reliably. A 32kbps 11khz stereo .mp3 file which ought to stream reliably over a 56k modem stutters and halts even over my DSL line.
Not to mention the fact that after I got all signed up they sent a message that their FTP was unavailable to free accounts for the time being while they do some sort of "upgrade".
I will keep looking til I find a free no ads site with FTP that doesn't choke on http streaming! Is that so much to ask?