UNC sources the package from a UNC path...configured anywhere. You have to make sure the access rights are correct.
"Directory on Notification Server" lets you choose a local folder on your server. Then, Altiris will create a network share for each of these folders.
Library as Luke told you already. Advantage: you could move (unconfigure) the whole library to another share. Altiris does the rest.
I never used "sourceing" from http link...
Today I prefer using the library. It's kinda lame using the Java Upload App, but it's the only way to use the library.