Yes xproj projects usually are distributed as nuget packages, so if you create output, it will generate a nuget package out of it.
You can use a folder instead of a local nuget feed server, copy all your nugets into that folder and configure it as one Nuget source. Will work just as if you would have a real feed... (and is much easier).
If you have to have your packages available online in the public, you can use myget, if you want a private feed.
Is your other project in the same solution as your web site? Use project references instead of nuget references!
If you want to pack everything together, including dependencies, to deploy your application to a server, you can use
dnu pack --dependencies
Regarding your other problem, did you run the command line from https://github.com/aspnet/home?
Also, read the remark below the command line, it says what you can do to add it to your user's path:
If the output of where dnvm shows a program files location before the user profile, or doesn't show an entry in user profile, then the install has either failed or your PATH is incorrect. After installing dnvm you should have the dnvm script in
%USERPROFILE%\.dnx\bin
and that path needs to be on your PATH
