I discovered after copying over 400 photos into /Public/Share Photos - from an SD card - that there were several jpg files on the SD card that were zero byte (empty) files. Not sure of why they were empty - but it seems that the presence of a zero-byte JPG (and possibly true of an empty JPEG) will cause the transcoding process to hang - forever.
At first I thought the transcoding process was very slow - not realizing that there were 3 or 4 empty jpg’s in the folder - but WD Photos would show the spinning “busy” wheel on that particular folder - constantly - and the File not found. (404 17.26) would pop up constantly (once per zero-byte file) as well as the impacted photos showing no thumbnail.
I finally noticed the zero-byte files and removed them from the folder - and within minutes everything was working. I did a few more tests - actually putting various other zero-byte (non JPG) file in the folder - without any problems occurring - but shortly after changing the extension on an intentionally empty file - to .jpg - the spinning circle returned to the WD App.
I think the transcoding process needs to specifically ignore zero-byte jpg files - in the likely event that a zero-byte jpg is inadvertently introduced into the folder.