I have the same problem. Tried updating to 11.1.121, but to no avail. Running server through port 4040 which is allowed in Windows firewall. Server also uses authentication.
Log on the server:
02/22/06 23:05:10 - JRiver Library Server Version 1.0.31 starting...
02/22/06 23:05:10 - Starting Auto Detect beacon
02/22/06 23:05:10 - Running on Port 4040
02/22/06 23:06:03 - Informing client they must authenticate
02/22/06 23:06:10 - Informing client they must authenticate
02/22/06 23:06:10 - Received request for version
02/22/06 23:06:10 - Sending version
02/22/06 23:06:10 - Received request for library
02/22/06 23:06:11 - Sending library
02/22/06 23:06:44 - Received request for a file:
02/22/06 23:06:44 - Error sharing file, file not found
Then the client's MC changes their filenames for their library to my IP address as the root directory, ie, /###.###.###.##\\./C\Music\... and then they are no longer able to play music out of their library without first renaming the filenames.
Sometimes when the client is asked to authenticate, my server prompts me to authenticate a connection to my computer.