I've come to the conclusion that the library software on the WDTVLive is rubbish. Everytime you turn it on, it wants to index the whole USB HDD and any networked drives too. This means you get a fairly hefty delay when you turn it on!
The next issue is that the library software will not allow recursive playback of files. So, it breaks the music files into sections reflecting genre. However, when you drill down in genre, I'd expect to see a big list of files (or be able to hit play on the genre). Instead, you simply find further folders holding the music files. I don't think this would be a problem if you stored all your music in a single folder.....but I don't. The work around? Playlists for genre. Trouble is these need to be kept up to date whenever you rip a new CD.
So, I've now switched the library software off on the WDTV Live. Maybe a fix is in the pipeline. Maybe it isn't.