Yes, the 'Use local paths instead of addon redirect for playback' setting is correct. That needs to be on. Just to be sure, I recommend that you reset your emby database via the plugin and do a fresh scan with the setting enabled.
Next, which Version of Kodi are you running? The CV Context Launcher is only available for Kodi 15.x (Isengard). On previous versions it will not work.
Also, which version of Mikes Nox Mod are you running. Its odd that you dont see the CV button at all. You did look for the button on the info screen of a movie, right?!
I think that Mike added the CV button only on the Github version of the skin. The monthly update was held back because there is (was?) a problem with a script the skin is depending on.
Here´s what i would do: (If you dont mind starting mostly fresh and setting things back up)
Do a full rescan of the emby db via the kodi addon
Update Kodi to the latest version
Delete under /KODIFOLDER/addons "context.cinemavisionlauncher" and "script.cinemavision" and under /KODIFOLDER/userdata/addon_data "script.cinemavision" (DISCLAIMER: I am not at my kodi machine right now, the names of the script and context could be not completely right, but you will find the right ones )
Delete under /KODIFOLDER/addons the skin.aeon.nox.silvo folder and, if you installed the repository, the repo.silvo
Reboot your Kodi machine, it should now show the "Confluence" skin
Take a deep breath and enjoy the clean air of your kodi install
Go to Mikes Github and download the zip file of his skin (or use git pull if you are familiar with git)
Unzip the skin, rename it from skin.aeon.nox.silvo-master to skin.aeon.nox.silvo (Again, i am not a my kodi machine and am just doing this from memory)
Make sure you have the required and recommended scripts installed check here (To get some, not all, needed scripts automatically, you could install the original aeon nox side-by-side to the silvo mod)
Install CV addon and the context launcher addon from the official Kodi repository
Setup the CV addon
Switch to Mikes Skin and hopefully you are ready for a Movienight
As for the pathsubstiution problem, here is my limited knowledge...When i enabled the direct path setting and did a rescan of my library, i couldnt play any files afterwards. I got the "This file is not in you library anymore. Do you want to delete it" error. So i checked and found out i have to setup pathsubstitution. You could test that very easily.
My settings are as described in the picture, but i am using a docker version of the emby server, so that will be very different to your paths.
I would just try around with different combinations and if you cant get it to run, the devs over at the emby forum are veeeery helpfull and reply quickly
Just from a quick glance i would try, From: \\servername\movies TO: smb://YOURSERVERIP/movies but that could be totally wrong
Hope i didnt forget anything....