WDTV live produces "unable to create media library...." error message

Ah – there are definitely certain drive types that cannot be detected by the Live, and this may be one of them.

However, first try it in another USB port – some drives work in one port and not the other.  Next, reformat the drive (this has worked for many others and of course you DO have your data backed up so it won’t be an issue to restore it).  Make sure you choose NTFS as the format type.  The odds are that it will then be available in one of the USB ports.