It works its just a bit tricky to get enabled. You may have to reboot the device to get it working.
Also if you have under 50% battery life the USB sound dongle will cut out. So make sure you have plenty of battery life.
MX Player works better playing videos then QQPlayer, but the sound with MKV files cuts out. On the QQPlayer the sound works fine.
The version of MX Player I tested was 1.7.40 for Froyo/Eclair.
Mediaserver doesn't work on the NST so any MP3s you add won't show up in Music players. To get around this use ES File Explorer built in music player to play local MP3s.