Yes, DNLA is supported, I've activated the DNLA server on my Synology NAS and can play the media from there.
I've had nearly no issue so far but I've the WD since 2 days only and have not updated the micro code.
My WD is wired connect to a Gigabit switch (even if the WD network card is 100mb/s) where the NAS is wired connect as well.
My router is a linksys wrt54gl under tomato, I've set up a fixed IP for the WD on the router side based on WD MAC address.
I've mainly played SD content (xvid) and quickly tested HD one, but as I still have a CRT TV I'm not connected by HDMI.
Small gap so far, when selecting videos and selecting my NAS as source, the WD shows me the 3 music/photo/video folders and doesn't limit itself to the video part. Same applied for photo & music.
I've not tested yet direct shares access, my workgroup name is not 'WORKGROUP' but this doesn't seems to create problems while using DNLA access (I don't see why it should BTW).