When I entered the IP address of my new BDP-1 into MPOD on my iPod Touch, it connected on the first try. Perhaps your iPhone is attempting to connect through its cellular radio as opposed its wifi radio? Can you currently use your iPhone to successfully talk to other devices on your local wifi connected network?
Regarding MPOD reliability.... I have discovered that fetching album art can cause MPOD to become less stable. If you're experiencing stability issues, give this a try. Be sure to disable art fetching from all sources: Local, Amazon, and Discogs.
When I had Local album art enabled to fetch from
http://bryston-bdp-1/music I was experiencing frequent MPOD crashes while attempting to initially load all my art. Since then I have discovered this only occurs when a large number of the album directories are missing their Folder.jpg file. By ensuring that all my albums contain a valid art file, my MPOD has become rock solid and no longer crashes or locks with art enabled. Once I figured this out, I became very happy with MPOD.
I agree with you that the BDP-1 manual sucks. While I was able to figure everything out without reading it, I had to ask myself "Would my father be able to successfully configure this thing using these instructions?" Sadly the answer is "no".