I have a WDHD Live running Beta v1.03.38 but I also experienced this problem on v1.02.21.
Any movie file (.divx, avi or mpg) over 300MB on the share will take 30secs to start and the lag is so bad it is unwatchable.
I have a 100MB LAN connection and the previous Media Player (a Medion Media-Tank) plays back the exact same files without any issues on the same Lan cable. I put a cable tester on the connection and it metered out fine.
When copied to a USB drive the files run perfectly.
Any ideas anybody?