I've got a d-link dns-323 (which has a built-in upnp server) and a 770. I had very similar behavior using media streamer. I could see the folders and browse through them, but I would always get the "file not found" error when I tried to play something. I discovered that twonkymedia had a version of their upnp server software ported for the dns-323, so I installed that and ever since everything has been working swimingly.

They don't seem to have an install guide for the readynas on their nas page:
http://twonkymedia.com/Download/Twon...chnicians.html

But a google search for readynas and twonky did pull up several hits, so I think it's possible to get it up and running on your box. Twonky costs $30, but they have a free 30-day trial.

Hope this helps...