In an earlier update, I claimed I had success connecting via SMB/CIFS instead of using AFP from Snow Leopard. However, that success must have been short lived, since I’m now getting the same error even with SMB. So I’m still without a clue on how to resolve this issue, save for a firmware update that I’m hoping will arrive to fix the issue. Until then, I can only delete using the Terminal app from Snow Leopard. For those Windows users that asked how I did this, remember that OS X is a Unix OS so I can use the command line to access the share. I am not using telnet or anything. Same would hold for any Linux users.
If there isn’t a resolution to this soon, I’ll probably end up returning the unit to Amazon.