You need to enable the Duduplication folder to allow direct backups; (Properties, Advanced Tab, Allow remote agents direcyou t access to this device)
You must also enable the policy, under Device and media, (Allow this job to have direct access to the device)
once you do these options, you have to restart backup Exec Services
Having the deduplication running on the target server rather than the Media server doesn't make it faster, it just prevents the deduplicated data from having to be sent through the network.
Now as to the speed, I found that the Full jobs only went slightly faster with deduplication, I am doing Monthly Full's with Daily Differenals, all going to the Deduplication folder.