I have had the ATV1 for some time with ATV flash and our media running off an external HD. We have all of movies and stuff on there and part from the hassle of syncing it works great. I recently purchased ATV2 for our kitchen, the intention was to stream stuff from our NAS drive wich is a WD MYbook world edition. After purchasing it I purchased ATV flash black, installed XBMC and it is all working.
I am however a little disappointed, whilst XBMC works well for playback I find the whole interface a little clunky, we have hundreds of films and TV shows and finding what you want is quite painful. Also the fact that our content is stored under files rather than movies is not ideal and it is certainly not wife or child friendly.
The built in media player does not work with my NAS drive for some reason (it sees and recognizes the drive but cannot access it) so I am stuck with XBMC. Am I missing something with XBMC? I see people raving about it but I just find it clunky and unintuitive, I am hoping I have missed something in the setup/import stage as right now swapping the ATV for WDTV seems quite an attractive option.