Using Google Media Server all media is "unsupported"

I have installed Google Media Server on 2 of my PCs to serve my Picasa albums to my WD TV Live box. The media server appears in the list on the WD TV Live and I can browse to the Picasa area. Once there I can see the thumbnails but when I try to view the actual file I get the message that it is an “unsupported format”. I have tried to view JPG and AVI files but neither works. If I browse for the network share then I can see the file. Can anyone help?

Google Media Server Version :

Picasa 3.6.0 (I don’t think that is relevant to this though)

After seeing your post I installed this server (after also installing Google Desktop) and also found that it does not ‘work’ - thumbnails but no supported media. Given that it is some years old, unsupported and more importantly not working I deleted it. I cannot see any real configuration that would make it work and therefore must conclude that it is incompatible with the WDTV.