In my first post, my major concern was the functionality of the music interface. I had thought that I would have to do some hacking on my Samba server to mimic playlists of all my music and artists, etc. But it turns out that directly attached hard drives or network shares (Samba or Windows network sharing) are not the only options. The other possibility is a UPnP server which is specifically set up for media sharing. Basically, the server knows all the meta-data like the artist and genre of a song, etc. and presents that to the player.
After an upgrade to my server from Ubuntu 6.06 to 10.10, I was able to install Mediatomb, a UPnP server for linux. After turning on the UI and turning off data storage caching (avoided database errors for me) in the config file, I had a very functional set up. Now the music interface is much better. I get a browseable menu with "All music", "Artists", "Genre" etc that I can get a much better view of my music.
The WD TV Live is not without it's issues though. First, an inexcusable in my view, is the lack of gapless playback. Every modern music player does this and that it does not is puzzling. Basically what this means is that even when playing two tracks from the same album, there is a slight (fraction of a second) gap between one song ending and the next starting. This is really irritating on live albums or "album rock" like Pink Floyd's "The Wall" where one track runs right into the next. Worse is that not only is there silence, the digital output is momentarily turned off, so sometimes there is an additional delay (and missing sound) while my digital receiver re-syncs to the output. They've known about this problem for a long time and claim to be working on a fix. We will see.
The second annoyance, which I have solved, is that the photo browser (also using UPnP) was showing most of my photos as very small tumbnails instead of filling the screen. Strangely my portrait photos were filling the screen. The solution, as it turned out, was to resize all the photos. As long as the photos are not too wide, they show correctly. I resized everything to 1080 pixels tall (HD resolution) and it's fine now. This was no problem for me since I already have a reduced size group of photos that I keep on my laptop rather than carting around the full sized collection.
The third thing, also purportedly being worked on, is that the Netflix streaming doesn't output the nice Dolby Digital 5.1 audio and only supports standard stereo. Supposedly a fix is coming for this later this year.