I would love to use this mod, it works.... but the items show up in the clients inventory.  Is there a way to have the items hidden or put in backpack?

What do you mean ? any items a player picks up/gathers/loots is automatically placed in inventory, its up to them to put them into the backpack,

What I'm trying to do, is add ammo, and all the other items set to 9999.
Then when a player spawns he has those items.  But I would like those items
either be invisible so not to take up inventory space, or placed in backpack.
But I don't believe ammo in the backpack can be used unless you move it to main.

You are right there, nothing in the backpack can be used unless placed in inventory although you can select food and it will have the "eat" option.