Model for the (infinity,1)-category of (homotopy-)limit preserving functors

I've got a simplicial model category $M.$ I'd like to get my hands on the (infinity,1) category of homotopy limit preserving functors from M to Spaces in order to compare it to another simplicial model category. So it would be convenient if I could have a simplicial model category model for the functor category.

I imagine doing something like the following (sketch):

1) find a model category which models the (infinity,1) category: $\textrm{Fun}(N^{hc}_{\bullet}(M^{cf}),\textrm{SSet})$. I'll call such a model category $\textrm{Fun}(M,\textrm{SSet})$

2) use Bousfield localization on the collection of morphisms S = {for each functor F, the comparison maps F(lim d) ---> lim Fd } in $\textrm{Fun}(M,\textrm{SSet})$ to get a model category structure which models the category of homotopy limit preserving functors.

So my questions are

Question 1: Given a simplicial model category $M$, what model category models the functors from $M$ to Spaces?

Question 2: Given a simplicial model category $M$, what model category models the homotopy-limit-preserving functors from $M$ to Spaces?

Answers to my question don't need to address my sketch, but I am curious about whether that will work. References would also be appreciated.

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Suppose that the dual $M^{\mathrm{op}}$ of your original simplicial model category $M$ is combinatorial, so that its associated $\infty$-category $\mathcal{M}^{\mathrm{op}}$ is presentable. Then what you are looking at is the $\infty$-category of presheaves of spaces $\mathcal{P}(\mathcal{M}^{\mathrm{op}}) := \operatorname{Fun}(\mathcal{M}, \mathcal{S})$ on $\mathcal{M}^{\mathrm{op}}$, which is again presentable. There are a couple of different model categories that present $\mathcal{P}(\mathcal{M}^{\mathrm{op}})$, one of them being the projective model structure on a category of simplicial presheaves. You can find the details in section 5.1.1 of Lurie's Higher Topos Theory.
The $\infty$-category $\operatorname{Fun}^R(\mathcal{M}, \mathcal{S})$ of limit-preserving functors is equivalent to $\mathcal{M}^{\mathrm{op}}$ itself through the Yoneda embedding $\mathcal{M}^{\mathrm{op}} \to \mathcal{P}(\mathcal{M}^{\mathrm{op}})$; i.e., limit-preserving functors $\mathcal{M} \to \mathcal{S}$ are corepresentable. This is proposition 5.5.2.2 of Higher Topos Theory.
@Joey: I edited the answer to include the concrete reference to the model structures that present $\mathcal{P}(\mathcal{M}^{\mathrm{op}})$. I don't know how to characterize functors that preserve only certain limits; of course, corepresentable ones do, but there are more. With respect to MO etiquette, you should mark the checkbox next to an answer if it does indeed answer your question. You can ask for clarifications in comments; for follow-up questions I think it's better to post them as new questions. In particular, the characterization of functors that preserve only certain limits might... –  Alberto García-Raboso Dec 26 '12 at 23:33