Thanks for trying to help. I called WD support. They told me you cannot set file Read Only permissions our any other type of permissions for users who are using XP operating systems. Any user on the network using XP will always have complete control over the files on the external hard drive that's connect to the WD TV Live Plus. Thanks again.!
I believe I read something like this in the Win7 help file about sharing recently. I think the bottom line is you have to have backups of all your media files these days with our having lots of music, photos and video files around.. Too many things can cause a file to get zapped, deleted, etc. There are even reports of the WD units changing file size of ISO files to "0 bytes". I know first hand that this can happen, and others had reported it before it happened to me. I lost two files this way and had to copy the back ups over to the WD drives.
Even so, files are likely "safest" left on the WD-attached drives, as there is only one way a person can tamper with them from the WD, and that is through the FIle Management menu. Just tell your gang that this menu choice is "off limits" and as for them causing any damage from their PC to the files -- just cross your fingers, AND have backups.