Why do ITunes and Pure Music not see each other?

One of the many issues that I had with the mini and why I switched back to a windows based server. A whole bunch more user friendly and actually just as good or better sound. Check out Music Vault Diamond.

What is the exact pathology seen when PM "cannot find them?" An error message? Continuing to the next track?

I don't have that problem, although PM can introduce some quirks at times. If you have protected files, PM chokes on those and stalls, as it can't always play through. (PM may have a setting for that... I haven't really looked.)