Tried what you said and got this:
# ipkg install mt-daapd_svn-1018-1_armeb.ipk
Installing mt-daapd (svn-1018-1) to root...
Nothing to be done
An error ocurred, return value: 1.
ERROR: Cannot satisfy the following dependencies for mt-daapd:
libid3tag libogg libvorbis ivorbis-tools flac sqlite2 bash alac-decoder
Try doing a "ipkg update". If that doesn't work, do a "ipkg install unslung-feeds", then a "ipkg update", then try the install again.
The config file is in /opt/etc/mt-daapd/mt-daapd.conf, and there is a web config, but it's still a work-in-progress. (read that as: doesn't work).
Basically, though, the config should be set up so that you can drop files in a directory called "mp3" in your "disk 1", and everything should work.