Me encanta cómo suena el saxofón en esa canción de Navidad.

In Spanish, encantar works like gustar:

• Me encanta literally means “it delights me”.
• The thing you like is the grammatical subject, and me is an indirect object.

So:

• Me encanta el saxofón. = I love the saxophone. (literally: The saxophone delights me.)
• Saying Yo encanto el saxofón would mean “I enchant the saxophone”, which is wrong here.

You almost never say yo encanto to mean “I love” something.

You need the pronoun to say who feels the emotion.

• Me encanta = I love it.
• Te encanta = You love it.
• Le encanta = He/She/You (formal) love(s) it.
• Nos encanta = We love it.
• Les encanta = They/You all love it.

If you only say Encanta, it’s incomplete; it sounds like something is delightful, but you’re not saying to whom.

The verb form (singular or plural) depends on what you like, not on who likes it.

• Me encanta el saxofón. (singular thing → encanta)
• Me encantan los saxofones. (plural things → encantan)
• Me encanta cómo suena el saxofón.
  Here, the subject is the whole idea cómo suena el saxofón (how the saxophone sounds), treated as one thing → encanta.

Cómo with an accent is an interrogative/exclamative word, even in indirect questions:

• ¿Cómo suena el saxofón? – How does the saxophone sound?
• Me encanta cómo suena el saxofón. – I love how the saxophone sounds.

Without the accent, como usually means “like / as” or “I eat” (from comer):

• Toca como un profesional. – He plays like a professional.
• Yo como temprano. – I eat early.

In your sentence it’s about how it sounds, so it needs the accent: cómo.

The natural word order in Spanish is usually verb + subject in this kind of clause:

• cómo suena el saxofón (standard, natural)
• cómo el saxofón suena (possible but sounds forced/poetic or unusual in everyday speech)

So Me encanta cómo suena el saxofón is the normal, fluent way to say it.

Here, cómo suena el saxofón refers to something real and specific: the actual way it sounds in that song.

Spanish tends to use:

• Indicative (suena) for real, known facts:
  • Me encanta cómo suena el saxofón en esa canción.
• Subjunctive (suene) when the manner is hypothetical/desired:
  • Quiero que el saxofón suene más suave. – I want the saxophone to sound softer.

Since you’re describing the real sound, suena (present indicative) is correct.

Spanish almost always uses the definite article (el, la, los, las) with musical instruments in general statements:

• Toco el saxofón. – I play the saxophone.
• Me encanta el saxofón. – I love the saxophone.

In your sentence, el saxofón refers to the instrument in that song, and the article still sounds natural and is usually kept:
Me encanta cómo suena el saxofón en esa canción de Navidad.

Yes, saxofón is masculine: el saxofón.

You may also hear:

• el saxófono – a more formal/complete form.
• el saxo – very common, informal/short form in everyday speech.

All three are understood in Latin America. In casual conversation you might often hear:

• Me encanta cómo suena el saxo en esa canción de Navidad.

Spanish has three basic demonstratives:

• esta = this (close to the speaker)
• esa = that (a bit farther / not immediately present)
• aquella = that … over there (more distant / often more literary)

Esa canción usually refers to:

• a song that both people know but is not right here/right now, or
• one you just mentioned in the conversation.

Esta canción would feel more like “this song (right now / the one that’s playing)”.

La canción is just “the song” with no pointing/contrast.

So you’d pick:

• en esta canción – if you are talking about the song that’s playing now.
• en esa canción – if you’re referring to a known but not-immediate song (e.g., one you mentioned earlier, or on a certain album).
• en la canción – more neutral, when it’s already clear which song.

Here, the saxophone sounds within the song, so Spanish uses en (in):

• Me encanta cómo suena el saxofón en esa canción. – in that song

De would normally express possession/origin/content:

• la letra de esa canción – the lyrics of that song
• el ritmo de esa canción – the rhythm of that song

So:

• en esa canción → where it sounds.
• de esa canción → belonging to that song (not what you mean here).

Both are correct, but they’re used slightly differently:

• canción de Navidad = literally “Christmas song”, very common and neutral.
• canción navideña = “Christmas-y / Christmas-themed song”, using the adjective navideño/navideña (related to Christmas).

In practice, both can refer to the same thing, and in Latin America canción de Navidad is very frequent in everyday speech.

In Spanish, names of holidays and special celebrations are capitalized:

• Navidad, Año Nuevo, Semana Santa, Día de la Independencia, etc.

But adjectives derived from them are not capitalized:

• canción navideña, espíritu navideño.

So:

• canción de Navidad (capital N)
• canción navideña (lowercase n)