http://www.e-frontier.com/article/articleview/1738/1/323/

You probably already looked at that. There is another good tut on the face room out there, but I cant find it in my list  :(

Yes you have to use James. Or one of the Poser characters. The face room doesn't work with characters such as those from Daz.

I've never had any luck using the face room, especially with a photograph. I think the dementions and angles are too difficult for me to achieve.  But others might have suggestions on this.

Personally, the best results I had trying to make characters look like peeps I know is to get out a picture and morph the heck out of the Poser character until it looks like them. Using this method would point you into the direction of gathering "how to use morphs" info.