Yes, that's my work dogfood machine and it doesn't have a ton of content. I just got Nancy's new home computer in so our main content machine here at home is offline while I put it in + Windows Home Server.
Yes. Think I figured it out. According to this: http://forums.zune.net/30/ShowPost.aspx it has to be in and played from my local library. I've just been streaming directly from Marketplace.