If you run it in background mode (via the init script) it will downgrade privileges. Whereas if you runti in foreground mode you’re running it as the user you are logged on with.
Presuming this is the use root, the problem lies within permissions.
Check wether the music directory is world readable. Also, the database directory has to be writeable to the user mt-daapd is running at.
If the structure isnt too different from other optware flavours, the database should be in /opt/var/mt-daapd.