Until recently I used the update feature on the ATV2 as expected to upgrade for example aTV Flash. That option is now gone, the other tools and apps are still listed as “Installed” or “Not installed”. I still run on base 4.4, did you leave that major version with the aTV 2.x?
I am on the 4.4.4 software (note the extra .4) and can update without problem. If you are on an earlier release I would not be a all surprised if you cannot update to the latest release. Having said that I guess an official reply from James as to the minimum release for the latest ATV Flash release might be welcome?