Some people say you have to transfer files from the SD card to the S1's internal memory before they can be accessed, which rather defeats to object of buying a S1 for me, even the 32GB model, as I have 49GB of mp3s.
Others say files can be played directly from the SD card.
The confusion comes from the fact that currently you can't from the native Sony apps - this is due to change once the ICS update finally reaches the UK!
So today you need a third party app from the store - there are many if it's just music then I find es explorer which is also a file manager with built in player to be pretty good. If you want movies as well I use a different app called mx player.
The fact is it is everyones preference and if you search this forum you'll find threads on this subject with more details and other apps both from myself and some of the other folks here.
I have used both Poweramp and Mixzing; my personal preference is for he second one as i find it easier to play music, talking books and video using one player. The SD card is referenced as SDcard2 in Mixzing.