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Google music will store music on the internal storage, open google music > settings > Cache during playback (uncheck this option)
could you upload a screenshot either here or to box or dropbox and post the link here?
keep in mind that you won't have access to all 16GB as some its used by the firmware
As you can see from these screen shots the staus bar includes the data from google music that is definately stored on the SD card. When looking at the app screen the device memory is shown correctly at the bottom of the screen. This is corroborated in the device facts tab in diagnostics. Thanks for your time on this.
I will include some screen shots of the google music settings and the app information.
That's rather odd, backup everything with your computer and then repair your phone with PCC
Bridge (for Mac)
Alternatives on How to backup Xperias
http://talk.sonymobile.com/thread/36355