I have all my tv and movies on a synology 416 Nas. Now while this is great and can run its own plex server, the cpu just isn't powerful enough for offline transcoding, which I do for my ipad mini 2.
For days I've been struggling with sync and optimization on the Nvidia shield tv. Compression settings seemed to be ignored, so i'd get back the same size file as the original. This seems to be connected to the fact that android allows read only mode for server connections. I was close to giving up until i stumbled on the solution.
You need to make sure you have a plex folder on the local hdd and include it in the list of library folders from the server...for example Movies. Even if you have nothing in it.
Now you can optimize to the local hdd, but also if you use that local movie path as your temp transcode directory, syncing works perfectly and pretty quickly too.
Hope this helps