I just now asked Hugo this very question, when I was having a beer with him night-before-last.

On my home network, I have a Rio Central that serves my receivers, as well as an Alcatel DSL modem that works as my internet router and DHCP server. I had exactly the same behavior you describe: The receiver says FOUND MUSIC SERVER, then it downloads its firmware from the server, shows its playback screen, says SEARCHING FOR MUSIC, then reboots. This continues in an infinite loop.

The only way I was able to get my receivers to talk to the central over this network was to put the central and the receivers on a different subnet than the rest of the network. For example, the Alcatel DSL modem is serving up addresses in the range of 192.168.0.x, and I had to make the rio central be in the range of 192.168.1.x.

Hugo explained it to me thusly:

The rio receiver and the rio central do a thing where the receiver accepts a DHCP address from the Central without confirming it. Then, after it downloads the firmware from the server, it tries to confirm the address. His guess was this: My Alcatel modem was denying the address confirmation that the Central had given out to the receiver.

I'm not sure how to solve this problem. I don't know if there's a checkbox on the Rio Central that allows the Receivers to get their DHCP address from the Alcatel router, yet still serve the Receivers. If so, I think that might be the solution. I'm currently waiting at the airport for my flight and will check this out when I get home.