why does jwplayer only work on local server?

why does jwplayer only work on local server?

I am using jw player 5.9 (have to use that version). I thought I had
everything working until I realized that the videos don't work unless I am
opening up the browser on localserver (windows 2003). I use full DNS when
opening and all works perfect on local host.
When trying to get to the site otherwise, IE10 just gives me a black
screen - nothing at all and safari/FF give me error - "Error loading skin:
Skin not a valid file type".
So is this some kind of perms issue with the zip template or something? I
have users set to full control...