It appears that I was correct; the lib directory is NOT supposed to be empty.
The 1.0.3 and 1.0.4 installers do not install the necessary libraries to this directory; namely:
- jcommon-1.0.16.jar
- jfreechart-1.0.13.jar
- junit-4.8.2.jar
- NetworkTable_Client.jar
Installing the last version that named the installer SmartDashboardSetup, 1.0.2 first, then installing 1.0.4 on top of that allows it to work correctly.
I hope this helps someone that runs into the same issue.