While hooked up to the computer, it appears as though it is holding 7.13 GB of information. However, when I try to put a 50 MB album, it declares that there isn't any space left. It wasn't always like this. Dunno what I did wrong.
All MP3 players will actually have less space than they say they do. That's because of two reasons.
The first is simple: Some of the memory is reserved for the firmware on the player. This is what makes up the UI and such, and without it you'd just have a USB stick on your hands. Usually this makes up a few hundred MB, on average.
Second, there are actually two different formats that memory are given in. One is in multiples of a thousand (or 10^3). 1 KB = 1000 bytes; 1 MB = 1000 KB; 1 GB = 1000 MB. The other is in multiples of 1024 (or 2^10), and have slightly different actually names (gigabyte = gibibyte, megabyte = mebibyte). This means that 1 KiB = 1024 bytes; 1 MiB = 1024 KiB ~ 1,049,000 bytes; 1 GiB = 1024 MiB ~ 1,073,741,000. Most storage devices use the 10^3 method, and most computers see memory in the 2^10 method. In other words, a 1GB flash drive will be seen as about .93 GB by the computer. Make sense?
So with your 8GB Clip, your computer will see the memory as about 7.45 GB. The other ~320 MB is probably being used by the firmware.
It's unlikely that memory is actually "disappearing" from your Clip, but instead that it wasn't actually 8GB from the beginning.
Also take into consideration that a file can occupy more space than it needs. If you view the properties of a file in Windows, you will see "Size" and "Size on disk," with "Size on disk" typically being larger than "Size." This is because, for quicker reading and writing, computers store data in fixed-sized units.
Suppose your computer stores data in units of 1024 bytes. If your file is only 389 bytes, it will still occupy a full 1024-byte unit which CANNOT be shared with another file. If your file is 1025 bytes, it will require two 1024-byte units: The first 1024-byte unit will be completely filled, and only 1 byte will be used in the second 1024-byte unit while the other 1023 bytes go unused. A lot of disk space is "lost" this way.
Here's an analogy: Say you have three containers of beverages in your fridge: Apple juice, orange juice, and milk. If each container is filled to only 1/4 capacity, you could save a lot of space in your fridge by pouring all three beverages into one container. However, if you did that, all three beverages would become indiscernible, so you'd be better off keeping them separate while wasting space. Computer data storage is a lot like that.