@TheMburu

My 2 suggestions (since I have the same exact model as you do):
  1. Get a WD TV Live media player - you can hook it up to your telly via HDMI and it can play stuff that's on your LAN or Internet - and supports all major formats - I think Wash or Alvin has discussed this before on the list.
  2. Upgrade your telly -  mine's a Samsung and it plays all kinds of formats via an external hdd - it has issues playing a few mkv files with non-standard dimensions but I got that fixed by setting up a DLNA server (tvMobili) on my laptop (ubuntu)  - and hooking it up via Ethernet. So I torrent on my laptop into a DLNA-accessible folder  - and voila - I can watch it on the telly. No messy file transfers and such. It supports wireless but I haven't gone to look for the USB accessory.
I use the latter option as I had the tv before I got the Sony - hence I really just use the HT system for playing DVDs and for audio output though an optical cable. I recommend the first option as it's cheaper.