If I use mp3: "/Music/StreamUploadedSongs/1" in the following code:
var player = new $("#jquery_jplayer_1").jPlayer({
        ready: function () {
            $(this).jPlayer("setMedia", {
                mp3: "/Music/StreamUploadedSongs/1",
            });
        },
        cssSelectorAncestor: "#jp_container_1",
        swfPath: "~Scripts/Jplayer/jquery.jplayer.swf",
        useStateClassSkin: true,
        autoBlur: false,
        keyEnabled: true        
        }
});
Here is what it looks like, you can see jplayer isn't moving the times correctly (they are overlapping) and also the seek/play bar doesn't work although the song can still be played:
Html Markup: 
<audio id="jp_audio_0" preload="metadata" src="http://localhost:6060/Music/StreamUploadedSongs/1"></audio>
Music Controller:
public ActionResult StreamUploadedSongs(int id)
{
        byte[] song = db.UploadedSongs.Where(x => x.Id == id).FirstOrDefault().SongBytes;
        return File(song, "audio/*");
}
If i change the mp3 property to this instead: mp3: "http://www.jplayer.org/audio/mp3/TSP-01-Cro_magnon_man.mp3" then it works perfectly.
var player = new $("#jquery_jplayer_1").jPlayer({
    ready: function () {
        $(this).jPlayer("setMedia", {
            mp3: "http://www.jplayer.org/audio/mp3/TSP-01-Cro_magnon_man.mp3",
        });
    },
    cssSelectorAncestor: "#jp_container_1",
    swfPath: "~Scripts/Jplayer/jquery.jplayer.swf",
    useStateClassSkin: true,
    autoBlur: false,
    keyEnabled: true        
    }
});
Here is what it looks like, working properly, the seek/play bar works and jplayer has moved the time to the correct positions: 
Html Markup: <audio id="jp_audio_0" preload="metadata" src="http://www.jplayer.org/audio/mp3/TSP-01-Cro_magnon_man.mp3"></audio>
I have other jPlayers on other pages and its the exact same with them too.
Edit: Just tried this:
 public string StreamUploadedSongs(int id)
    {
      string filePath = Server.MapPath(Url.Content("~/Content/TSP-01-Cro_magnon_man.mp3"));
       return filePath; 
    }
I put the mp3 file in that directory but it doesn't play at all now. If I paste this into url http://localhost:6060/Music/StreamUploadedSongs/1034" it just returns I:\Users\UserName\Desktop\MusicSite\MusicSite\MusicSite\Content\TSP-01-Cro_magnon_man.mp3 instead of playing the song.