There was a post on the MG lists about setting up Model Glue and the fact you need mappings. I had this lying around from some internal writings and thought it might be useful. It details setting up MG with no mappings.
Andy, just to be clear, are you saying that the second setup - with Model-Glue installed in a sub-folder - actually works (when there is no /ModelGlue in the root and no mapping)?? I find that hard to believe, based on the way CFCs are searched.