OK. I backed up 19 DVDs today, added them to the MyMovies collection application, then set the main directory I'd put them in to share across my home network. I installed MyMovies on both the server and the HTPC, with each DVD entry pointing to the folder where that DVD was backed up to. All movies are on a large external USB 2.0 drive but media center on both machines could play the same movie at the same time, even if they weren't syncronized. Sharing was specifically limited to two users at a time. It didn't seem to matter that some files were in VIDEO_TS folders and some were in the DVD-named folder itself. All were found and would start playing within 15 seconds of telling media center I wanted to watch the movie I'd selected from the database.

Apparently there is a way to have media center watch the video folder and automatically add new DVDs backed up within it. I haven't figured that out yet though.

The VLC media player also works over the network, but isn't as convenient as using MyMovies in Media Center. You have to brouse for and open each file seperately rather than just picking them off a pretty graphic cover-art list.