Media Player turns off after viewing a video which is longer than 3hrs

You play a file, then you stop it, then you start playing again and WDTV asks you if you want to resume where you left off your start from the beginning.

Due to the cut-off-time being exactly after three hours, this sounds more like a timer somewhere (wdtv, tv, …) kicking in than an issue with a file, especially, when the three-hour-cutoff is also happening when starting anywhere in the file.

EDIT: Are you using the “Media Library”?

Yes

Yes, what does that mean?

Well, if remuxing, as described by JoeySmyth, won’t help, you can only try to change every option, try downgrading to an earlier firmware etc.

I tried remuxing but that didn’t help and I was trying to avoid downgrading to an earlier firmware which is what a WD technician suggested to me to do but when I saw what I had to do, it’s too complicated because originally I got an IT technician 2 set it all up.

It’s absolutely not difficult.
Extract http://download.wdc.com/wdtv/wdtvlive_rollback_1.01.30.zip to an usb-stick and plug it in, the “New Firmware”-icon should appear and just flash it.