I use MC as a Library Client on the same machine as I use the WDM driver, no issues there.
Same here.
As you are getting the 'There is nothing to play' error, you should look at your Zones.
Which one is active when you play to the WDM?
Which one has content listed against it in Playing Now? (Clear all Zone Playing Now's before testing, and see where your media is directed to.)
Do you have fancy ZoneSwitch rules?
Do you have multiple Zones set up in MC?