Hi,
I had the same issue.
1. Make sure to use the very latest version of TVHeadend. The newer versions give you more stream options. I use MKV stream option.
2. In TVHeadend, copy the link (the PLAY link on the left hand side of each channel) and put this into SMW - new channel link - edit the link and remove everything after the ? - including the ?
3. Note that you need a powerful box for TVHeadend, transcoding is very processor hungry! If you dont transcode, WAN access is very choppy.
Dan