Ive done a lot of testing and just wanted to post my findings on here. At this point I have tried all versions of released firmware. I find that 1.03 is the most usable for streaming local media over network and 1.04 is best for the service apps. I purchased this device for the purpose of streaming my local media to my tv from my network shares. since I use it mostly for video, here are my test results on 1.03 fimware. 1.04 has problems playing almost everything so im back on 1.03.
AVI - Wired plays for a few min then gets really stuttery and loses audio, does not recover. Wireless is same.
MP4 - Wired plays perfectly. Wireless plays same video for a few min then gets stuttery and loses audio.
MKV - Wired A 5 gig 720p video plays perfectly. Wireless plays perfectly.
Wired A 10 gig 1080p video plays for about 10 min them gets shuttery and loses audio. Wireless does same.
I have a very reliable gigabit network along with a extremely reliable wireless N network running at 130 Mbps. I have dual band turned off with QOS setup for the mac address of the wd tv live to get high bandwidth. Ive done monitoring and found that with wired AND wireless, the bandwith is well above what the device would need to stream the files. So speed is never an issue here.
I see WD has posted a known issues post with playing certain video formats. Im going to assume that this is why I can never get low quality avi containers to play no matter what. also Ive seen a lot of other people complain about the shuttering wit mkv files so sounds to me like this is also a known issue.
To sum it up it, look to me like WD has some performance issues with playing mkvs, avis, and mp4s. Hopfully they fix this. The whole concept of what this thing is supposed to be able to do is awesome. Maybe someday it will actually be able to do what it says it can do on the box.