I've tried this - you can have xlobby and a client running on the same machine (I have not tried multiple clients), but what happens is the windows start bar pops up on xlobby each time you try to access something within the client. In my application I have a plasma display and a touchscreen running off the same computer - obvously it's not ideal to have the windows task bar poping up each time I use the touchscreen!
I think something programming-wise would need to be done to allow these to peacefully coexist on the same machine.... Would love to see a fix, especially now that the multi-zone stuff is really going to be taking off. With a single maudio 4-10 card and a few pci video cards, you could run an entire whole-house touchscreen music server!
Todd