I see two differnt issues here that have two different answers. Issue 1 - You are having start/stop issues when streaming from the network and or seed servers. Issue 2 - you dont understand why if a movie is 'on your drive' why it is going back tot he network for data.
Answering issue 2:
I would suggest checking how large your default 'store' is for amount of data you are allowing the application to store on your hard drive, then you can do a little math to determine wether you will be playing from hard drive or what you have to suck down from the network.
For example, lets say you have a store of 2GB (max you allow on your drive at any time).
Movie A is 1.5GB in size. Movie B is 1.5GB in size. Movie C is 500MB in size.
You start out with nothing cached on your HD.
You start watching movie A, its not on your drive, so you suck the movie down off the network. It fills up 1.5GB of your available store.
You start watching movie B, its not on your drive, so you suck the movie down off the network. It fills up 500MB of whats left of your store, then OVERWRITES 1GB.
You start watching movie C, its not on your drive, so you suck the movie down off the network. It OVERWRITES 500MB.
Notice, at this point, movie A is NO LONGER ON YOUR DRIVE because you overwrote it.
If you hop back and forth betweeen movies, it is possible that you are overwriting another movie, therefore that would explain why you think you are reading a movie off your drive, but you really arent.
Answering Issue 1:
The short term solution to this, IMO, is get a better system/connection, because people who have more powerful systems/connections dont seem to have these issues when sucking down straight from the network, but you are. Crappy solution, I know. IMO the long term mass consumer solution to this is when they release a set-top box with PRE DESIGNED SPECIFICATIONS that they know for a fact performs well when talking to their network. Doing that IMO will allow alot more quality control than trying to program a multimedia app that is going to work with every single computer out there (see 486?).