Hello, the problem might be related with a damaged pin on the USB port. I would try using another compatible USB dongle, just to be sure. You can also try rolling back to and older firmware version. Check the links below for more information.
List of compatible devices for the WD TV Live HD Media Player and WD TV Live Plus HD Media Player
How to roll back the firmware on a WD TV Live HD Media Player or WD TV Live Plus HD Media Player
