All the 2TB drives are internal SATA off the motherboard. I do have two of them connected via a PCI Express expansion card since the board could only handle 6 of the drives. I do have one external 4TB hard drive that is in the pool that is plugged in via USB. I am using XBMC/Kodi for media. Thumbnails are on the client PCs. I tested the hidden pool folder and played the file in VLC as you suggested and still had latency in playing video. A 20GB blu ray would have to buffer every 30 seconds to minute. The external HD I played video files off of that I mentioned in the OP is not in the pool but attached to the server via a USB. I played an uncompressed Blu Ray from it on one of the client PCs and had no issues. I have StableBit scanner installed on the server and the 500GB one is showing the reallocation I mentioned and a drive in the pool has 321262 load cycle count on a maximum of 300000. These are the only things coming up in Scanner. All else show healthy.
I will replace the 500gb drive and see if that helps.