Craig,
I monitor and watch my users with sarg on sme 5.6. It also works on sme 6.0. At my primary site, I use MS dhcp with a 15 day lease (bigger LAN). This allows me to easily map sarg IP addresses to users.
At another site, I use sme as the sme dhcp. In this case, each client is entered as a local host into the 'hostname' on server manager (enter mac address). This is an IP reservation from sme. Be aware that reservations can not be included in the sme dhcp IP range. The client name defined for the 'hostname' will appear in the sarg report. This works best on a small LAN, as you have to enter a reservation for each client.
ryan