I too am trying to puzzle this one out.
You say the Apple ID collapses into a button - do you mean an on/off button like the 'Group by Album Artist' button that appears immediately above the Home Sharing fields?
I have put my normal Apple ID in several times, the one that works every time I download an app from the App Store and the two fields remain fields. 'Shared' does not appear in 'More' on my music app.
Could this have something to do with the fact that I have opted not to have a password in iTunes on my computer under the Music Sharing preference? If I set one up and entered that on my iPhone instead of my Apple ID password, is there a chance I'd be able to get it running?
I really don't care whether it is Home Sharing or Music Sharing - I just think it's very un-Apple that between Macs our music libraries are just there, yet on IOS devices where space is at a premium it isn't automatic or even, in my case, possible.
I have, on the other hand, no problem at all streaming TV programmes I've recorded with eyeTV on the network upstairs, but streaming a small music track seems to be too much trouble!