In short, there is no "quick start guide" to help people compete with netflix. It can be done, but it's not easy.
As far as your specific concerns:
1) The roku manuals cover which formats are supported. If you are taking video from DVD's, be careful of copyrights...
2) First, are we talking SD or HD? Remember, video takes up alot of bandwidth, especially HD. 1and1 is a good service, for serving video, you might want a real dedicated hosted server... starting around $100/mo.
3) This step is fairly easy if you are comfortable with database programming on the web. Are you familiar with asp or php? Use the appropriate one depending on your hosting service. Throw in the html & css and it should be easy.
4) There is a video player example... The video is just a file on the server, or a live stream... live streams are more advanced... but it sounds like you just want to play saved movies. So they are just ordinary files as far as the web server in concerned.
5) That's easy if you're familiar with website authentication. You can use roku registration, or just use the same user/pass as the website uses. Just have the website database keep track of the login status. Once logged in, I would have the web server hand the client a key, and then the client would use that key for each request. The key could be the timestamp of when the user logged in. If someone else tries to use the same login, it would kill the previous key... or reject the login... either way, it would be safe to assume only one person is using that account.
6) I know nothing about Western Digital players... If you can play video on roku, I'm sure you can get it to play on the pc. You may have to write multiple interfaces to play the video. But it shouldn't be a big deal.
It's not technically difficult if you're willing to sit down & learn... but it is a lot of work, and lots of pieces to put together.
-Kevin
YungBlood
Bringing more fun to Roku!