This is a WDTV Live firmware; not the original.
* Added more USB WLAN adapter support. Click here for list of compatible adaptors.
* Added cover art display function when viewing music files in album view.
* Added user selectable on/off for fade in and fade [...]

The latest version is now out with only a couple changes.  The two changes are that it is now based on the 1.02.11 firmware and it includes Ernis patched mount.watch (untested).
Download
Download Section
VN:F [1.7.2_963]Rating: +12 (from 56 votes)

After months of inactivity a new release is finally out!  Remember, this is still a beta release.  Here’s whats new:
Resolved Issues:

Resolved issue where UI Language displayed as OFF when English is selected.
Resolved UI issue where “ContainsWWW” shows up in the search menu instead of “Contains”.
Resolved MKV audio/video sync issues.
Resolved issue where songs were displayed in [...]

Over at AVSForum a member got some pictures of what looks to be a WDTV2 prototype.  There’s no information about the new version except for the noticeable network port, video inputs for the standard def, and the DTS downmix.

Discuss this in our forums
VN:F [1.7.2_963]Rating: +52 (from 56 votes)

B-rad has released his latest custom firmware for the first time in a few weeks.  The new version conatains:
* based on firmware 1.02.10 * fixed (finally) optical drive functionality * USB Hub support for more than one device per slot * LaurentG’s mount.watch to allow disabling of Media Library * LaurentG’s additional thumb browse views [...]

As promised, the download section is updated. All official firmware versions are listed. Might be usefull if you want to go back to 1.01.02. Check it out now or stay tuned. More to come!
VN:F [1.7.2_963]Rating: 0 (from 0 votes)

IR not responding to your remote control? Or does it recognize one command as a series of commands by false?
- Don’t return it yet, just Hack it!
Warning: Do it very carefully not to avoid your warranty!
Hack by Xtr3m3
(www.avforums.com)

– Just 5 Steps –
Step 1 – Open it up
You need WD TV + some small tools [...]

Finally WD released a new official firmware version!
Download link – WDTV_FW_1_02_00.zip

What’s new?
- Enhanced cover art, album art, and thumbnail support for media files and folders
- Additional subtitle languages and decoding support
- Improved media playback and navigation
- Added more audio formats for MKV container
- Fixed several bugs that were reported by the WD TV user community!
Official [...]