I have a Sony BDP-S370 Blu-ray player, which is compatible with DLNA 1.5 servers. WHS 2011's media sharing shows up on the player and the player is able to play files from the server. The WHS 2011 machine is a HP ProLiant Athlon II Neo (dual core 1.3 GHz)
N36L MicroServer, so while it has sufficient horsepower to serve files, it lacks the CPU horsepower needed to transcode videos at high quality. Therefore I simply re-mux into a supported container (or transcode if this is not an option).
The trouble is that WHS2011 is transcodes files (into sub-SD quality) that are supported by the Sony Blu-ray player and therefore shouldn't be transcoded (specifically MPEG-TS, .ts, files). This is even worse when the server is handed a 1080i or 720p .ts file.
Other DLNA servers (e.g. TVMOBiLi) query the player to find out which formats the player can play natively and only transcode if necessary.
This, as well as the lack of native support for the .mkv container format, is a significant weakness in WHS 2011.