Can someone say if it is possible to use WPA security over a WDS bridge? I know WEP is supported but WEP is EASILY crackable.

Also I note many posting with WDS problems. Does anyone have a positive experience or is there some fundamental problem with WDS?

not sure about the drayteks but my colubris map-330 allows me to select wep, tkip, aes-ccmp and you select the remote wds mac address that can connect.
yes wep can be cracked but you need a fair few packets for that as well as be close enough to the access point. use the strongest key, mac filtering and check logs for authentications etc.
wpa/wpa2 are not supported on wds because they encrypt the mac packets which are fundermental to the proper operation of wds.
so although i can use different encryption eg wep,tkip or aes-ccmp (the encryption method), its not the same as wep, wpa, wpa2 (the protocol)

The manual says that the security modes for WDS are
1) none
2) WEP
or
3) "Pre-Shared Key"

Is Pre Shared Key anything like WPA?

no..... its not wpa. it uses a preshared key just like wep uses a hexidecimal key. my guess for the drayteks (i don't use their wifi) is that it's possibly tkip or aes-ccmp which do use preshared keys.
wpa/wpa2 cannot be used on wds because those protocols encrypt the mac headers whereas wep does not.