As to your test rotating the Shrek toy with a stationary camera: This sort of shooting can be a bit tricky because it requires the background behind the rotating object to be completely blank. If the background is not blank, then Photosynth will try to lock onto both the background and the object and will get tangled up. Photosynth does not reconstruct good point clouds of moving objects because the question it is trying to answer is, "How far is each point from every other point?".
For tips on this sort of shooting, see Page 5 of the Photosynth Photography Guide, available in several languages here:
(If you would like to donate a translation, see this discussion:
From my perspective, though, it is usually easier to keep the object stationary and just move the camera.