As for the black/white checkerboard, this indicates the imagery could not be found by the server.
F&^%$^&ing ArcGIS - it's taken me a week and a half of frustration to only find out that its the ECW files I'm using that are the issue! Not to mention the file paths, the options that aren't options, the need to manually specify MaxPS values, to boost the rows and columns numbers...why does it have to be so F%#$$%% hard to load rasters into a dataset and have them display?????
Basically imagery is on server B and ArcGIS Server is on server A. I've registered a shared folder on server B that has the imagery in it and also added an arcgis user and gave it read permissions to the imagery. I can successfully view the mosaic dataset when logged in as me and also the arcgi user, but when I publish it to ArcGIS Server and view the service (as a map service or imagery service) I got the checkered tiles below around 1:5000, so yeah the overviews are readable, but for some reason ArcGIS Server is not reading the imagery even though I've setup all the correct permissions etc.?