Well, this is my lucky day
I have not done any changes to my setup since my last post, except for two things:
1. I disabled the "Advanced DNS" setting on my D-Link DIR-655 router and
2. I restarted my Synology NAS
My WDTV Live is working great now! I have played about two uninterrupted hours without any network drop so far.
WDTV Live is just great!