I have it working now, and I did not upgrade the firmware.
Turns out the issue was on youtube side. Earlier, I had removed my Google+ account from the Google Account settings page, apparently that still left the youtube account linked to Google+. After some more research and watching a couple of youtube videos I was able to go to my youtube channel settings where I saw a link under the user name for disconnecting the youtube channel user name from Google+. Clicking that link disconnected Google+ from the youtube account and now I am able to login to the youtube video on my WDTV.
