Yes. This doesn't work for the same reasons that the Send To -> External choices and the Drag-Drop to the desktop don't work from a Library Client machine. When you are connected to a Library Server, the "filenames" of the files are not direct pointers to the files on disk, because the system does NOT assume that you have the same filesystem mounted locally. It is designed to work without an accessible network share, and over the Internet.
This means that the "filenames" you access from a Library Server client, are basically just special pointers to the files on the Library Server, and not representations of the files themselves. That's what those weird URLs are that you see.
The system in MC works around this, by communicating with the server and applying actions there. It applies the metadata changes locally, and then syncs these changes back to the server. It also works for some "file maintenance" things, like deleting files, but even this doesn't work perfectly (if you delete a file on a Library Server client where the system would normally pop up the dialog asking to remove the empty folder, this dialog actually pops up on the Library Server machine itself, which might be useless if the Library Server machine is headless).
It is too bad. It ends up limiting me fairly often in practice. I think that ideally with some future version: If the filesystem is there, MC should be smart enough to use it and give you the full power and access to all the tools just like if you are on the server itself. If the files in question are not available on a "local" filesystem (network mounted drive, mostly), then it should gray-out those functions whenever possible (internet streaming mode, essentially).
