The 4096-byte physical sector structure is prerecorded at the factory. There is nothing that any software, including WD Align, can do to change that.
The function of jumper 7-8 is to add a +1 sector offset to each LBA. This means that when Win XP accesses LBA 63, the drive transparently accesses LBA 64 instead. So if the jumper is in place when the drive is partitioned, this means that the first partition will be automatically aligned. If one chooses this jumpering option, then this jumper must remain in place until the next time the drive is partitioned. In contrast to XP, Vista and Windows 7 start the partition at LBA 2048, which is divisible by 8. Therefore the jumper must not be installed for these OSes, otherwise LBA 2048 would be remapped to LBA 2049, thereby misaligning the partition.
I have tried to explain it a little better in the following thread:
As for WD Align, I believe it works by physically moving the data in each sector so that each 4KB cluster falls on a 4KB physical sector boundary. That's why it takes so long, when the drive is full of data. A better approach, IMHO, would be to remove the 7-8 jumper and repartition the drive using a utility such as GParted which is able to create partitions on 1MiB boundaries (just like Vista and Windows 7). Then you could use WHS 2003 to format these partitions in the usual way.
BTW, AFAIK, the 7-8 alignment jumper may not be functional in all models.