Sorry I should have been more specific. I already know about your PCs 1, 2, 3.
I was more interested in what you specifically do when you "close the server". I suspect that what you are doing is;
1. On PC 2 or 3 which is running as a Client of PC 1, completely close MC, waiting long enough for MC to completely shut down as it can take a little while.
2. Restart MC on PC 2 or 3, which is set up by default to load the local library.
As you know, many settings are common between MC running as a Client of a MC Server using the Server's library, and when running the same PC using a local library. One of those settings that are common, and therefore active whether the PC is running as a Client or against its own local library, is the Media Network. Now your PCs 2 and 3 should not really need Media Network turn on, as they will connect as a Client of PC 1 without Media Network set up on them. But from memory, based on previous discussions, you also want to be able run PCs 2 and 3 as MC Servers to serve their local library to iPads, a bedroom PC, or something like that. So you have turned on Media Network on PCs 2 and 3.
What this means is that when you run PC 2 or 3 as a Client of PC 1, PC 1 is also running as a Client of PC 2 or 3. Or is potentially, if you have connected them that way at some time in the past. Therefore you are seeing local content on PC 2 or 3 while they are connected as a Client of PC 1 because the data flow is going like this, for example;
PC3 <= PC1 <=> PC3
or maybe more clearly, the local library content of PC3 is getting to PC3 when it is running as a Client of PC1 this way.
PC3 => PC1 => PC3
with all connections via Media Network.
Hence, when you tried to locate local content while running say PC3 as a Client of PC1, MC didn't look at the local directory structure. It looked at the reference to the local file in the library on the PC1 Server, hence the m01p:// message.
I asked the question;
What "Server" are you closing or not?
because the only way to completely close the server on PC 2 or 3 when connecting to PC1 as a Client is to turn off Media Network on PC2 or 3. Otherwise PCs 2 and 3 are always acting as servers.
BTW, the above circular connections are probably why your Client/Server experience is REALLY slow.
For example, I set up Media Network once on my workstation PC, which is usually always just a Client of my HTPC. From then on, even though I hadn't connected from my HTPC as a Client to my workstation PC, the workstation local library still showed up as an available library to view on the HTPC. Only when I turned off Media Network on the workstation PC did that local library disappear from the HTPC instance of MC.
Now the above may not be what is happening in your situation, and it probably shouldn't be even with Media Network turned on in PCs 2 and 3, but I think that it is likely if you have Media Network turned on in PCs 2 and 3, and have at some time connected all PCs in all ways. That is a consequence of using MC in a way that it is not, currently, designed or developed to be used.
Of course I could be completely wrong. But the evidence of that m01p:// message makes it likely that I am at least partially correct.