External HD - Best File Set Up ?

I Have a 3500 TVisto Pro with a 3.5" 1.5TB Drive in it
its a Multimedia, DivX, ISO, MP4 Player & its Small & Compact (With a Silent Cooling fan Built in!)
I can Use it alone as I was to watch Movies, TV Programs, Etc on my TV. Or Use it as a External HD. with the USB Cable.
Since I got my ATV I would like to use it and use my TVisto as an external Drive for the ATV So I have Everything in one Place.

My question is I have Multiple Media Formats on it ( ISO’s for Movies, AVI’s, Mp4’s, DiViX,)
The Drive is Formatted for FAT32 and have Folders ( Movies, TV Shows, Videos) ie TV Shows folder has ie:
TV Shows-
{Sub folder Lost Season 1}, (Episode name.s01e01, Episode name.s01e02, Episode name.s01e03), Etc…
{Sub folder Lost Season 2}, (Episode name.s02e01, Episode name.s01e02), etc…

Movies-
{Movie#1} ISO format
{Movie#2} ISO format
{Movie#3} ISO format
{Sub folder Movie }, (Movie 1.Avi, Movie 2.Avi,) etc…

Etc…

Will this format work for Sapphire :?: or do I have to change something ?

That format should be fine. As long as the drive is formatted in Mac OS or FAT32 it will be recognized by the AppleTV.

Yes its formatted to FAT32

I am going to try it tonight. - Thanks

Ok I Tried it (Connected my 1.5TB 3.5 Hard Drive) and it recognized it.

I tried to watch 2 videos I had on it 1 was a AVI file and it played but it was a little Choppy at points.
But the Second one (Which I have ALOT of ISO Files) plays but its really Bad , the Video can audio was not syncing up great and when it starts the viedo takes about 1-2 mins to become clear (I see the Menu & the movie at the same time)
Does anyone else have these problems ? and if so, is there anyway I can Fix it ? or do I have to Live with it ?