Hi,
I'm working on desktop-on-demand virtual win7 machine with some network disk user profile mapping. I tried googling all kinds of articles that suggested location of the mm.cfg file and I did create mm.cfg files in all of them - nothing worked. I'm quite convinced that it has something to do with the way my user profile is wired in the virtual machine.
I believe the only way to have flashplayer find the mm.cfg file is to tell it (somehow) where to look, let's say "mmCfgPath=C:\mm.cfg". I couldn't find anything near this on the web so I'm writing here, hoping some Adobe-guru / core-team-member will tell me some undocumented trick 
If there's any way I can provide you with some useful debug info you need, just tell me.
Thanks,
Peter