Not sure about the specifics of Sharepoint, but the file you'll need to edit in smallthumb.aspx.vb. The line:
showfilename = imagepath & "\" & Request("domain") & "\" & Request("user") & ".jpg"
needs to be edited to reflect the path to the Sharepoint image. I'm not entirely sure if this function supports urls in place of a path. If it doesn't, then you'll need to do some further trickery to get it working.
In all honesty, though, it'd probably be simpler to copy the files out to where LS is currently looking.
Edit: It doesn't support urls the way it is now. You'll need to do more to get it to work.