I was just pointing that out as I am now wondering why you bought the WDTV, I trust it wasn't just for music streaming.
As long as you keep the compression to a minimum you won't loose sound quality. As has been stated before, the bare minimum is 128K. I would stay with 256K or higher, preferably a lossless format, which is why I went with FLAC for my streaming and when I want to load up my wife's iPod I just compress the songs at that time, although I have started a second 256K library to mirror the FLAC library of songs, but isn't growing very fast, not a high priority for me.
