Electronic – Audio streaming and udp doubt

Maybe i'm missing something here (paragraphs would help) but with the C18 compiler local variables within a function are generally allocated on the software stack so i have no idea what the following means:

but the reality is you have a finite amount of space to allocate all local function vars that exist in an entire project

By moving all your variables to globals within a module you are requiring there is space for all of them at the same time.

buffers and have to access that memory via pointers so I can avoid the semantics of memory banking.

What compiler are you using?

The dsPIC seems to be not powerful enought to play an mp3, although you can use a dedicated chip to decode and the dsPIC to play the music and read the file on the SD card. A tutorial on a similar project can be seen at http://www.uchobby.com/index.php/2008/07/21/dspic-wav-player/

Microchip themselves have an application note on how to port Helix MP3 decoder to PIC32, (AN1367: http://www.microchip.com/stellent/idcplg?IdcService=SS_GET_PAGE&nodeId=1824&appnote=en551513) so that may be the natural choice.