Couple of items. First, you must run DNS internally and if your domain is also public you then must support split horizon DNS. Without DNS, you will have many issues with your server.
Next, what hardware are you running this on? If you are doing the Mini route, you must get a USB to Ethernet or Thunderbolt to Ethernet adaptor. Primary network and meta data should not be one and the same. Create two networks, ideally on independent switches (or you can VLAN with not route between). Then you connect all devices to your primary network via the default interface and then connect all SAN devices to the meta data network by the secondary inteface.
It can not hurt to define DNS for both your primary and meta network.
If you need specific answers, ask specific questions. How in your first post did you convey mini as your platform? And if:
When I seutp the server app on Mountain Lion it asks which interface it should use to configure the server - would I do public or private?
Means you are wondering what to check during initial setup of the server in this screen:
Always choose Domain Name. This gives you the greatest potential for service setup and also saves you pain and suffering should the needs of the server change in the future.
As for the other question:
I understand that DNS queries should not be running across the metadata network but is it ok to leave it on in Mountain Lion or should I kill it?
How am I to answer that? You do not describe the rest of your environment. Do you have DNS running in the environment already? If so, and you have entered proper A and PTR records for the server, then the Apple service is unnecessary. If you do not have DNS running elsewhere, then use the Apple service.
And finally, Xsan is not a simple thing to deploy. If you do not understand how to configure and tune the volume, consider reaching out to certified pros that do. Also, test before you deploy. Beware native extended attributes. Have a backup plan.