$ ls *mp3 | xargs mplayer
Playing Lemon.
File not found: \'Lemon\'
Playing Tree.mp3.
File not found: \'Tree.mp3\'
Exiting... (End of file)
The xargs utility reads space, tab, newline and end-of-file delimited strings from the standard input and executes utility with the strings as arguments.
You want to avoid using space as a delimiter. This can be done by changing the delimiter for xargs. According to the manual:
-0 Change xargs to expect NUL (``\0'') characters as separators, instead of spaces and newlines. This is expected to be used in concert with the -print0 function in find(1).
Such as:
find . -name "*.mp3" -print0 | xargs -0 mplayer
To answer the question about playing the seventh mp3; it is simpler to run
mplayer "$(ls *.mp3 | sed -n 7p)"