Could we see the /etc/yum.conf and the error message your seeing? Basically you need a few things to get yum to work:
1.) yum RPM installed
2.) An /etc/yum.conf with the appropriate URL's in the config file. This could point at http://localhost/SOFTWARE/
3.) httpd running on box if doing it via web url
4.) in the SOFTWARE directory, you will need headers. What linux version are you running? For newer software, createrepo seems to be the key. I think the command "yum-arch ." builds the headers too.
Try that and let us know what comes to be