To correct my previous post firmware 1.20 has twonky 4.4.8 installed and this version does stream AVCHD. I found a download location from Buffalo that still have 1.2 posted.
http://www.buffalo-technology.com/support/getfile/?TS-XL-WXL_v120_2.zip
You have to edit the TSUpdater.ini file and change
VersionCheck = 1 to a 0
ie: VersionCheck = 0
I downgraded and all works well. I will be hosting this file myself as i know buffalo will delete the file from the the EU site.
http://www.ianniello.com/TS-XL-WXL_v120_2.zip
I suggest if Buffalo reads any of these posts that the release notes contain ALL changes to the firmware. Only reason i purchased this unit is for the media server to host my Audio / Video / Photo files. If it can not it will find it's way to ebay....
Thanks for all the help everyone.