I also have a QNAP TS-201 with two 500Gb HDDs in RAID1 mode and I am running the latest firmware.
The strange thing is that I can see al shares/directories and files on my TS-201 from SMS, but when I want to play an AVI or MP3, SMS hangs with the message "Detecting file format".
When I connect to my Windows XP PC from SMS, everything works fine.
Can you play movies and mp3's from your TS-201?
Any idea what the problem could be?