Well, my mpd on the sheeva with a USB sound device also works like a charm. I use the minion plugin in firefox to control it.
name "USB Audio"
Note that I had to change the device.
So what version of mpd?
root@sheeva:/etc# mpd --version
mpd (MPD: Music Player Daemon) 0.15.9
Copyright (C) 2003-2007 Warren Dukes <firstname.lastname@example.org
Copyright (C) 2008 Max Kellermann <email@example.com
This is free software; see the source for copying conditions. There is NO
warranty; not even MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.
[mad] mp3 mp2
[oggflac] ogg oga
null fifo alsa oss
file:// http:// lastfm://
High CPU usage was a known issue with some of the older MPDs. I had to build mpd myself for a variety of reasons. I'd be happy to post a tar ball if needed.
Hope that helps,