I said DLNA servers do not normally support .iso files because I was just reading that Mezzmo (a very good and very inexpensive PC-based DLNA server) supports DVD.iso video:
If you have many ripped DVDs and ISO files, then Mezzmo is perfect for you! Streaming ripped DVDs and DVD ISO files is easy with Mezzmo. Mezzmo will automatically find all your ripped DVDs and DVD ISO files and add videos from them into your Mezzmo library. Then simply stream these videos to your devices just like you stream any other video.
If you want to stream DVD.iso directly to the WD Live with full support for DVD menus, you select Windows Network Shares as your content source. You should see all the DVD.iso in the shared folders. I have hundreds of DVD.iso for TV shows on my servers that I watch this way. The biggest problem I had with that was getting the PC shares configured properly when I switched from Win-XP to Win-7 for my server. So when you say Seagate network drive is that a stand-alone network drive or is it on a PC -and- do you have the shares configured properly. The WD Live and the server have to be on the same workgroup.