When you say there is no activity when you check workspace one do you mean the screen is blank or the Launch Manager is present and
and the cursor is blinking?
If the LM is present with the Activating Oribter message that's normal.
Usually this means your orbiter is processing or, if finished, the menu is present.
After this point you might get error messages if your bluetooth dongle is causing problems or something else is going on.
However, if everything is finished and happy the Activating Orbiter message is the last thing you see.
So I'm guessing when you reboot the same thing happens?
And your architecture on the Media Director is i386 and all that stuff from the Setup Diskless MD Alpha 1 instructions?