David,

>When setx runs, it first sets the classlibs of my non-MM parts, which means if I do createobject('BizObjName'), I get the non-MM class to instantiate. I've written a PRG which hardcodes a solution (through RELEASE CLASSLIB ALIAS X IN APP), but it's obivously not very flexible.

I took this from VFP's help file:
SET CLASSLIB TO MyClass ALIAS MyCntrls
mMyButton = CREATEOBJ('MyCntrls.MyButton')
Maybe this helps. I've never tried this, but you can reference a certain classlib in CREATE().

>Is there another way in MM to handle duplicate class names? And does this mean that duplicate class names are forbidden in MM?

In your app you could also use the Abstract Factory to create your objects. In the classes table you can specify the IN clause of CREATEO().

HTH,
Armin