I used to work in the electrical and electronic servicing industry. The tests and claims you posted are amateurish. That is probably why the WD moderators moved your post from Issues to General Discussions. You should read the WDTV Live specifications and carry out extensive tests before complaining that the WDTV Live is defective.
According to the publicly available Sigma specifications, the Sigma chips used in the WDTV Live/SMP are manufactured compliant to the international digital video recording, playback and broadcast standards.
Professional digital video production is produced and edited on expensive commercial machines compliant with the international digital video recording and broadcast standards. Professional digital video recording and playback does not require computer processing anywhere in the record or playback chain.
“I am comparing like with like. Streaming the same videos via PS3 Media Streamer to a PS3 is faultless.”
“My PC, running XP SP3, is fine, the network is fine. My PS3 can stream fine over the same network. It is only the WD TV which malfunctions.”
There is big difference between the PS3 and the WDTV Live. The Playstation PS3 is a computer and costs between 4 and 5 times the price of a WDTV Live. The WDTV Live is a video streaming box. Computers use the CPU and GPU and software to bit map the video graphics into mimicking a dedicated hardware digital video chip.
The WDTV Live does not contain a GPU and is incapable of bit mapped video playback. The video playback is by detecting the video stream and passing through the video stream to a dedicated hardware digital video chip.
A digital hardware video chip is far superior, faster and will outperform a computer CPU and GPU provided the playback video is compliant to the international digital video recording and broadcast standards. If the digital video recording is outside the standards, the digital hardware video chip will lock up.
Windows software and applications are not perfect. Non-compliant video streams will play on Windows machines and the PS3 because of codecs and sloppy hardware timing signals.
Manufacturers are not legally obliged to support a video stream non-compliant to the international digital video recording, playback and broadcast standards.
The issue you are reporting is a classical case of the hardware digital video chip locking up due to an incompatible video stream or digital artefacts imposed on the video stream.
You have not answered my questions.
What happens when you virgin rip a DVD and bluray to a USB hard drive and play the ripped titles directly on the WDTV LIVE SMP; do any of the movies stutter? If the movie plays without locking up then your WDTV LIVE SMP is functioning correctly.