How to play a folders worth of music/video in VLC media player

By commandline, with recent versions, it should work with your command options and the name of the directory(ies) instead of the files:

vlc --LZ  "Party Music"

If your path includes spaces you need to include it between "".
Only if you modified the default options you may need to add also --playlist-autostart.
The option --playlist-tree only shows the playlist as a tree. Enable if you want.
If you are not in the parent directory of "Party Music" you have to specify the whole path, complinat with your operating system (e.g. "C:\Music\Party Music" or "~/Music/All Music/Party Music" or /media/user/usb/Party Music).

Note:
VLC usually remembers the last setting you decided. If you run from commandline (or with a link built for this purpose) it will overcome the usual behaviour following the prescription specified by the options without changing it. If instead you will change some setting during its run it will remember the next time.

From vlc --help

-L, --loop, --no-loop        Repeat all                      (default disabled)
-Z, --random, --no-random    Play files randomly forever     (default disabled)
                             VLC will randomly play files in the playlist 
                             until  interrupted.             (default disabled)
--playlist-autostart, --no-playlist-autostart
                             Auto start                      (default enabled)
--playlist-tree, --no-playlist-tree
                             Display playlist tree           (default disabled)

Tested on VLC media player 2.1.6 Rincewind on Ubuntu, but it should work on precedent versions and for different operating systems too.

According to this blog post the --playlist-tree will play everything in the folder passed into it. For example:

"C:\Program Files (x86)\VideoLAN\VLC\vlc.exe" --playlist-autostart --loop --playlist-tree c:\playlist\

Also note that the example is for a Windows system, you may need to modify the syntax slightly if you are using a Unix based system.

As I didn't get tbenz9's solution working, I wrote a little batch script doing the trick:

cd C:\your\directory\with\music
for /r %a in (*) do "C:\Program Files (x86)\VideoLAN\VLC\vlc.exe" -LZ --one-instance --playlist-enqueue "%a"

The --one-instance option tells VLC media player to keep only one window, and I think --playlist-enqueue is quite explicit.

On Linux, it can be simply achieved with:

find /my/music/directory/ -type f -exec vlc -LZ '{}' +