There are some annoying bugs in later versions of PMS but workarounds are available…
playback of CD / DVD ISOs or rips
If you have problems with CD/DVD ISOs or rips you probably use a later version of mplayer tool. Streaming will encounter a timeout during building of the mplayer font cache. You can create the font cache manually by playing a video directly without usage of PMS. In order to do that drag’n’drop a video file to mplayer.exe (located in win32 subdirectory). Restart PMS after doing that.
web streaming
VLC support is broken in later versions of PMS. It’s only working on Mac afaik, but even there you have to use quite old VLC version 0.9.8. Chocolate boy tried to fix some problems in mencoder engine in order to use it for web streaming instead of VLC. Read this thread to get more infos. He created a tool called ps3mencoder which is a wrapper for mencoder. Here is the readme.