Underfoot is fine, and having the client on the same machine as the server is fine. These are just troubleshooting steps. You need to try and connect to a different server because right now there's no way of knowing if your client is broken or if your server is broken.
Your Underfoot client will need some work to make it complete. You can play with it without these steps, but you are missing files that may impact you. You'll need to copy files from a different client if you have one, or a live install. The list and instructions are here:
http://www.eqemulator.net/wiki/wikka...ssingFilesList