Many people are butting their heads against windows 7 when really the solution is pretty easy. The WDTV box is DLNA 1.5 certified. DLNA was created so that all the different devices, media players, TV, bluray players, game consoles, picture frames, mp3 players could share media in the home. Most of these devices do not support samba, logins, security or special file systems. So DLNA solves that problem.
Right click the folder you want to share with the WDTV and pick include in library. It does not move the folder , it merely places a link to it in your library. Then turn on media streaming . On the WDTV box look under media servers and the files will be there. No passwords, security or anything to mess with. People should get familiar with DLNA now because it will be used in the future for all devices sold for the home. Things like digital picture frames are not going to come with support for samba and file sharing .
Another reason to use it is that windows7 will ask the WDTV box what it supports before it streams. If windows 7 can play a file but the WDTV box cannot then windows 7 will automatically transcode the file . Meaning that if you can make windows 7 play a file then it will always play on the WDTV regardless of whether the box supports it or not. It does not always transcode files either, so things like MKV will play in their native format, so don't worry about windows 7 messing with the picture quality on supported files.
Of course you are free to keep trying to use samba and making all your files compatible with that and having to change things around every time you buy a new device. But I prefer to go ahead and learn how to use DLNA , setup my files and network for it and buy new devices, bring them home, plug them in and they work without me having to mess with settings or my network.
For more info on media streaming open help and support in windows and type streaming in the search , it details the whole process.
There are also DLNA servers you can install on your pc and they do not need passwords/file sharing setups either.
List showing pros/cons of other DLNA servers if you want something other than the win7 version:
I recommend tversity for new users. It is easy to setup and adds support for hulu .
I prefer playon if you really want to expand the WDTV capabilities. It has a free trial but is $40 after the trial. It adds support for local file streaming along with hulu, netflix, discovery channel, fox news, MTV, podcast, southpark and tons more with plugins: