right well after my little episode the server was back up and running that same evening after a reinstall. hadn't imaged it yet but the install didn't take too long and had SP1 already downloaded.
settled on a normal workgroup rather than a domain, have to admit that was going to be a bit overkill. so ive now got the users set up, shares set up, allway sycn running between the microserver and the nas using UNC paths, drives mapped on all client machines.
just need to reconfigure the paths on the WDTV and see what the streaming is like, but having no bother listening to FLAC on my laptop (just using standard mapped drive) at the moment.
going to have a look at some of the free DNLA server programs tomorrow for the iPad.