Yes I agree with what superczar has to say. Over time it will surely degrade the router performance too. Let me tell you my experience with a pogoplug which just has 128mb of ram (most mid level routers have 128mb ram, I might be wrong here). It has a sata port and with a sata 3 ssd connected the transfer speeds were dismal 10MB/S and the gigabit ethernet port, sata 2 port or the USB 3 port didn't help me. The culprit was the internals of the pogo plug read memory and processor.
On the other hand my bananapi gives me a good 30-35 MB/S transfer speeds over the gigabit ethernet network. It uses about 500-600 MB of ram for a file transfer of about 10gb. I have a raspberry pi 2 and I still have not tested it for the speeds and I am sure it wont be any good even with a 1gb ram as the ethernet is 100mbps and it is on the same chip as the USB port.
As I told in my first port for you to play 1080 movies it is better to run your WD live on an ethernet gigabit switch with the file server directly connected to the switch. For the internet connectivity you can use a wifi bridge (which will serve your purpose of browsing and youtube). But for the file server I would recommend something with a gigabit ethernet and sata port (even rasp 2 will do if you are on a budget- trying buying on ebay, I bought one for 2500 using some coupons and cashbacks). Buy a gigabit 5 port ethernet switch though 8 would be better for future expansion.
If you don't have a budget now, save some more and build a proper home network rather than adding a mid level router which can't really handle everything by itself.
Try the Pi2 on a 100mbps network, you may be pleasantly surprised
Even low compression 1080p is no more than 4Gig an hour so all you need is 4*1024/3600 = 9mbps
Even if you add 100% overhead, you need no more than 18mbps which even wireless g can handle - 100mbps ethernet is way more than you need
Gigabit ethernet comes in handy only during large file copy over a network, not otherwise
More often than not, people end up blaming the network , The bottleneck typically is elsewhere
Just one more tip, wherever possible, use NFS mounts instead of Samba
PS: My storage is entirely on Pi2 now, video playback happens via XBMC (Windows) in the living room, XBMC on a PiB+ in the media room or vanilla VLC on a laptop
The main network is a cheap ADSL modem router from TP Link (on a different subnet acting just as a modem) a DIR-850L (central router), an Airport express (for airplay and range extension), a cheap sub 2K DLink random model for range extension
The backup network is a Airtel 4G modem and a cheap TP Link wireless repeater
The network handles extensive Video streaming and significant all day data traffic for my home automation and has given me no hiccups/no latency/no restarts
The only time I have wished for faster speeds is when I was consolidating data from different drives in different onto the Pi2 but there too, i was just being plain lazy as a one time job would have been better done by a physical USB connection
