What is Library Server?
Library Server gives users access to their library from any computer on the network or on the Internet, as long as both computers run the same version and build of Media Center.
It provides on-demand streaming of files (music and images) from a server to a client. The server is the one that makes its library available to other computer, while the client is the computer that sees those files. It allows the user to share the library from one computer to another computer, or across the Internet.
You can listen to your home computer's Media Center library at work. You need to run the Server on your home computer, and the client on your work computer. Both computers must have the same version and build of Media Center.
Library Server and DVDs
Library Server cannot share DVDs across the network. Library Server uses the HTTP protocol to transfer files: where there is a filename in a local library, there is a URL in a shared library.
Playing a DVD relies on 3rd party code: J. River does not control this code. The 3rd party code does not correctly handle URLs, only filenames. This may be by design, to prevent sharing DVDs over networks.
To be more technical: DVD playback is different from other video file playback in that it uses a DVD Navigator filter instead of a regular file source filter. Therefore the URL source filter is not useful here.
Sharing DVDs between multiple computers on network is achievable using Library sharing DVD Library in Media Center.