Wild guess: the problem is your file. These 2 things do not go together:
Format profile : High@L4.1
Format settings, ReFrames : 5 frames
L4.1 stops at 4 reframes and WDTV (although I can only guess your unit is not the newer WDTV) does not support content with higher no. of reframes than 4.
Actually thats not true. The profiles define a size of the "DPB" (Decoded Picture Buffer), not an absolute ref frame limit, and for L4.1 its 32768 macro blocks in size.
One 1920x1080 video frame is 8160 macro blocks in size (one macro block is 16x16), so 4 of those fit into the DPB.
However, his video is only 1920x800, one frame is 6000 macro blocks, so 5 of those fit into the DPB.
Hence, the level is not violated.
Regarding the original problem of not being able to seek, it sounds like the WDTV does not support time-based seeks, and unfortunately MC doesn't support byte-based seeks (yet).