From all you're telling me it seems as if executables from the installation package can't be executed after all. Could you please check permissions on those folders?

ls -l /Library/PreferencePanes/Squeezebox.prefPane/Contents/Resources/
ls -l /Library/PreferencePanes/Squeezebox.prefPane/Contents/server/Bin/darwin/

(the path you posted was not correct)

Transcoding would fail if the binaries in Bin/darwin were not executable. And the pref pane wouldn't be able to fire up LMS if the helper scripts in Resources suffered from the same.

--

Michael
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