(Not sure if I should post this here or not. Delete it if it's out of place.)
WDTV Live's latest firmware 1.06.43_v won't play music files (ALAC and AAC .m4a are what I tested) transcoded by FFmpeg. I'm not sure if that's a flaw with the new firmware or PMS, or PMS's WDTV config file.
It used be able to play FFmpeg files in the last official firmware 1.06.15_v
My workaround was to disable FFmpeg audio and use Mplayer Audio instead.