When using the Remove Duplicate Entries option found in REM > REM MISC (or Shift+Delete), playlist items with identical paths but different casing will not be seen as duplicates. Therefore, the duplicates will remain.
How to reproduce the problem:
- Clear your playlist
- Add the same song twice to your playlist
- Save the playlist
- Open the playlist file in your favorite text editor
- Change the casing of even one letter in the file path of one of the two file path entries
- Save and exit
- Load the playlist into Winamp
- Select Remove Duplicate Entries > it will not remove the duplicate
Of course, here we're modifying the path manually, but the casing mismatch might happen for a variety of reasons.