I am getting the same error on my Windows 7 setup.
WD TV Live is wired to my network (set as Work, not home, and WORKGROUP). Have set everything up according to the manual (Turn on network discovery, Turn on file and printer sharing, Media streaming is off , and Allow Windows to manage homegroup connections (recommended)).
Have set up a network share to my media folder.
My network consists of: JOHN-PC (my PC’s name) and WDTVLIVE
I can use the WDTV menu to access Folders then Network Shares, which shows JOHN-PC, which when selected shows my Movie folder, which I’ve set to share.
However, when selecting this folder I get “no media in the current folder” error. There’s 100 movies of various formats (mp4,mkv,avi, etc) sitting there. I’ve gone under advanced share settings and made sure that permissions for Everyone is set to Read and Change.
Any ideas how to get the WDTVLIVE to see the media in the folder?