Dawntreader - I have been frustrated beyond words with this same issue and I must tell you - I SOLVED IT for me. I hope this works for you, as well.
I had to remove power to the device, depress the reset button on the back as I plugged in the power cord, and kept the reset button depressed for 5 seconds. The manual claims that keeping it depressed while powered up for 4 seconds will do a soft reset, but this did not work for me. Manual claimed that if I were to depress and hold the reset button with power removed, then hold for 40+ seconds after applying power, would do a hard reset (still retaining data). I found that my method of only holding it 5 seconds restored it to a hard reset condition, and I know this because I had set my IP address as a static address (10.0.0.100) above my DHCP pool, which I set to end at 10.0.0.99.
Now, the key is, after this hard reset, which bought me just enough time to log into the dashboard before things went dark again, I went to Settings>Media and turned off DLNA Media Server (which was on) and iTunes (which was on).
IMMEDIATELY this unit began to respond like an alien removed its corrupted innards and replaced it with a brand new creation!
Please give this a try and respond if it works. I have been flabbergasted that seemingly everyone on the planet who has purchased one of these has this same issue and that WD has never suggested the steps which magically restored this machine to everything they claimed it would be when I bought it.
TimeMachine backups are working flawlessly. Even during the first backup (largest of all) of my MacBookPro, the interface was responsive, snappy even, and I was shocked and delighted beyond words.
I hope this works for you. If it does, please post the method to every board where you searched for help. Others deserve to know.