I think there's a general set of problems here that -as others are pointing out- are more generally applicable to Windows 8 / RT, not specific to the Surface. You could get any Windows 8 or RT PC or Tablet, and still have these problems, so, this sort of issue is not Specific to Microsoft Surface, but Specific to Windows 8 / RT.
If I'm understanding it properly, you have these problems:
1 Xbox SmartGlass won't connect up properly, or performs slowly.
2 Xbox Music and Xbox Video apps won't let you sign in because of an account issue
3 You are having problems putting media on the SD Card
4 You're having problems with certain video formats
Problem number 1: I agree, Xbox smartglass performance needs major improvement. I'm assuming what you're wanting to do is stream music / video to your Xbox over the network. Personally, I have used this feature without too much trouble, but there are circumstances in which it won't work. (you can't for example stream rented movies to your Xbox). This is an area where Microsoft need to get things tightened up somewhat, but it's anyone's guess as to whether they will focus on delivering such improvements, or whether we'll have to wait for the next Xbox for real change.
Problem Number 2: Account issues ... I feel your pain. It can be hard to find the right place to get things done. All I can say is that it might be allow easier to try and find the right account portal online than wait for the PITA support reps to help you! Try xbox.com , zune.net , account.microsoft.com profile.microsoft.com and commerce.microsoft.com - have a hunt around. Getting this issue sorted will likely be a good idea in the long run anyway if you're a Windows & Xbox user.
Problem Number 3: This is another area where again I agree there is an issue. Microsoft have built a new, friendly, simple UI in Metro, and not having to worry so much about where your data is stored is supposed to be a part of that. File libraries is how this is achieved, but the fact that SD cards can't be easily and quickly added to these libraries is silly. I know you don't want workarounds, but the workaround for this one does work - check out the 'guides' section of this forum.
Problem Number 4: When it comes to video formats, there is allot that the in-built Video app will play, but of course there is always going to be something you can't play. If you were on a desktop machine, you'd probably quite happily fire up something else to play it .. like VLC perhaps. This is Windows RT however, and if you need something else to play your media file ... you're going to have to search the store for an App. That might sound like a cop-out answer, but keep in mind that Windows RT tablets (and this applies to iPad, Android etc) are /appliance/ style computing. They're extensible yes - but they're also locked down to preserve the overall performance and stability of the device.
It sounds like you've run into a number of problems that are unfortunate, and I'm sorry you feel the Surface is a waste of money. I would ask you to perhaps have a think about the many other areas of this tablet where you might find it compares pretty favourably against the iPad, or Android tablets. Over time I have little doubt that some or all of the problems you're encountering will get ironed out - it is still early days!