With decent processing power like that...I'd build a WHS box or just a random linux/windows based server and do more than just a simple NAS.
But, if you really just want a NAS type of setup:
FreeNAS worked okay for me, it's easy to setup and lightweight.
There's also unRAID if you have a bunch of hard drives of different sizes and want some sort of data integrity and for all your drives to work as a single networked drive. I never got around to trying it but I've read it works well. Transfer speeds are supposedly crappy but plenty for media serving which is what it sounds like you're doing.
I've personally been using WHS and like it a lot. You don't HAVE to use the PC backup feature but as just a server it works fine as well. I use it to serve music (Squeezebox and otherwise), DVD rips using MyMovies, and various other applications. Along with the PC backups.
WD Live should be able to work with any shared network folder.