As they ever say when one issue is fixed 2 more pop up.
In this it has highlighted in testing an issue when only supplying a Local Default File Settings configuration WITHOUT a remote Settings URI configuration. Could of sworn I had fixed that some time again but it has reappeared again, so I will try and
address that shortly.
However, in testing with your Provider configuration above it also highlighed that your PubCenter Configuration is not serving Ads for some reason. When I used the configuration from the example app (tried both the config from SL and XNA projects)
they work fine. Not sure why it would work directly plumbed into PubCenter though.
Also note if you are testing in the emulator, PubCenter do not allow you to use Live Config, you can only use "Test" config, if you look at the output from the "Log" event from AdRotator it will display this.
Will get back to you on the issue but suggest you test your settings in the file above against those in the example apps
Issue logged - http://wp7adrotator.codeplex.com/workitem/2623