I have just brought WDTV Live, and I hooked it up with my 42in Full HD Phillips LCD TV. I can see there are two problems with the picture quality
The color depth is VERY shallow. It seems that its using 16 bit colors or some thing like that.
The gamma correction (or what ever it may be) is wrong. I say this because the lighter colors are blown out and the darker ones appear too dark.
I have tried every possible setting with HDTV. I am running this in FullHD 50 Hz mode.
This might not be the problem with HD setting or the cable or the TV, as when I connect to the TV using composite cable, the above two issues are still there.