I was having a similar problem. If you have time on your hands, the easiest way to get around the gracenote bugs is to clear your library and the gracenote files (found in c:\users[username here]\appdata\roaming\winamp\plugins\gracenote, with appdata as a hidden folder in your users folder), deleting all the files in there (leave the backup folder, you might want it later).
Then, with this clear and the library empty, dump 1-5 albums in the library at a time, then run the playlist generator (right click an item in the library, "view tracks similar"), and wait until it spits out a list (can take a minute or two if they are big albums). Every once in a while, go back to the gracenote folder and copy everything into the backup (in case it crashes, its files become corrupted and you need to start all over again), making sure to do so AFTER having the generator spit out its list (that way you know the current files are in working order).
I was able to knock it out while doing other things on the computer, every few minutes adding another album or two. The biggest problem was that I discovered an album of mine simply would not load into the generator, every time I put it into the winamp library the generator would crash, so be sure to back it up often (if it does crash, also remove the last batch from the library before trying to load it again).
Before doing this work-around, I searched myself for alternate playlist generators, and the one you found was the best alternative I could come up with. It was buggy when it was new (moreso than gracenote), so I think anything else you would find would be fairly fringe (so either tons of bugs, nearly completely random, or both). If you can bother with the work-around, it really isn't so bad.