Hi there,
I think you don't need to set up your KMS server, but anyway, take a look here:
http://www.windows-noob.com/forums/index.php?/topic/649-how-can-i-setup-a-kms-server/
Now let's try to answer your questions.
First of all, don't ask why because I don't know, your KMS server will not work until at least 4 PC tries to activate, the 5th will be successful and then also the others will be ok. In other words, you MUST have at least 5 PCs.
Once your server is up and running, the clients who need a key, query the DNS for a _VLK (I think), which should point to your KMS service. The server should responds and send the key.
Be sure to understand that this process must be completed every 6 months.
If you want to see a good explenation of this process, watch this MS's video:
http://www.microsoft.com/downloads/en/details.aspx?FamilyID=bbf2eb61-2b30-4f2d-bccd-df53e220b8e9&DisplayLang=en
Let me know.