This question is a follow up to: Model for the (infinity,1)-category of (homotopy-)limit preserving functors.

Warm-up Question: Given a simplicial model category $M$, what model category models the $(\infty, 1)$-category of presheaves of spaces on the $(\infty,1)$-category associated to $M$?

I'm skeptical that the projective/injective model structures on simplicial presheaves on $M$ achieve this goal because they don't seem to use the weak equivalences of $M$ at all. (Although now that I think about maybe SSet-enriched functors "see" the weak equivalences in $M$.)

I'll use $N^{hc}(M^{cf})$ to denote the homotopy-coherent nerve of the simplicial subcategory spanned by the fibrant-cofibrant objects, ie the $(\infty,1)$-category associated to $M$.

Question: Given a simplicial model category $M$ and a fixed diagram category $D$, what model category models the $(\infty,1)$-category of functors from $N^{hc}(M^{cf})$ to Spaces which preserve homotopy limits indexed by $D$?

I was hoping the answer would look something like the following. Denote by Fun(M,SSet) the model category which answers the warm-up question, and by S the collection of natural transformations {F(hlim X) ---> hlim FX } where S ranges over $F:M \to \textrm{Spaces}, X: D \to M$. Then the model category of D-shaped homotopy limit preserving functors from $M$ to Spaces is modeled by the (right?) Bousfield localization of Fun(M,SSet) by S.

If you do answer the question the way I hoped, please say something mildly conciliatory about the fact that S seems too big.