Try playing http://localhost:port or http://127.0.0.1:port rather than your LAN IP. That works for me with VLC.
Also, you have to restart the scrobbler before port changes take effect.
The official last.fm scrobbler can act as a radio relay. Just go to Tools > Options > Radio and specify a port. Then point your squeezebox at http://pc-ip:port.
I don't think there's a way to get a direct connection, last time I checked last.fm used a proprietary streaming protocol to deter ripping.