You mean that they have to be on the LinuxMCE machine? I took for granted that it would add all media from networked computers.
No
Yes
LMCE makes folders on the share, you have to move the files around on the share (into the new folder).
Just check your NAS/Fileserver to check if there are new folders (public, user1, user2, and so on).
Move the media you need/want to the appropriate folder.
The reason is that you can still have 'private' files this way, and LMCE woun't have to go trough a whole lot of system and program files (for instance)