Ok, first off I love it when someone pays attention and posts the config files and server screems
Your first problems is boot5zones.win9x.bat For 3.4 there is no zone9x just the zoneNT but it seems to work about the same on either OS. So just change zone9x to zoneNT Second, while it shouldn't cause problems, the second IP on each line is usually kept 127.0.0.1 But either way should work. Your server always apeared locked because your didn't have any zones running.
On the minilogin side, get the updated one from the main page files section "Minilogin-jun-1" and that should get the local only play working.
The problem where you disconnect if you move... That is a new one, and I really don't know. Get yours up and running and see if it happens on your server. Try both minilogin and the internet setup.