I can't get it to stream properly to the xBox 360 either.  I am using Windows Media Player 11 as a UPnP server and it works flawlessly.  I won't use the DNS-321 UPnP right now and maybe never if it doesn't work any better than this.  I'll just use WMP 11.  I am currently using the NAS for backups, my media collection, and as an FTP file server.  All of this works properly with the exception of file permissions in V 1.01.  They have a tendency to disappear when the NAS is restarted.  If D-link will post the distribution firmware, I'll roll back to V 1.00 and use that.  For what I want, that will work fine.  I am giving up on UPnP.
It looks like this product was brought out way too fast - before it was really ready.  I honestly am getting quite frustrated myself with really nice hardware that won't work because of weak and faulty firmware and manufacturers that sell a product with problems and then do not update it any further.  The best thing D-link could do is to put the source out for open source and the problems would be fixed in a real hurry.
Overall I really think this is a very nice product.  If D-link would just get these problems fixed, it would be a tremendous product.