Hi Darren,
When WM-PP is active we use SAP standard storage type (100) to stage the product to production line side from where consumption takes place. Also as a best practice it is always advisable to create two separate storage location (Production storage location) from where the consumption will take place, (WM Storage Location) where u will store the Raw Material / Packing material & SFG and stage the material to production line side based on the requirement and to the bin which is defined in the control cycle. Reason fro two separate storage location is that this holds good in terms of ownership of stock in business perspective.
with regard to your second query related to stock when you use LP12 you will get stock in two different column in LP12 screen one is Warehouse Stock which the stock in entire warehouse which can be replenished to Line side (logic to calculate this is system picks the stock removal indicator from the Material master and then goto storage type search(T334T table) and find the storage type defined against that indicator, club stock of all the storage type and displays into Warehouse stock column.if you will exclude the storage type LS in storage type search strategy then it will solve your problem)
and another is Storage bin quantity which displays the stock available in the bin defined in control cycle.
Hope this helps