First make sure you install the latest ATV Flash update as per the instructions.
I discovered that this problem occurs because there seems to be a conflict between the WMV codec for Quicktime (Flip4Mac) and MPlayer (Perian).
Also, if anyone has ever used the Flip4Mac codec on the Mac it is a dog when it comes to playing a WMV file as it can take a few minutes just to load a file.
So what I have done to get smooth play back is to uninstall the Flip4Mac codec all together and things are working perfectly.
First Make sure all the settings on your ATV are correct:
In the DVD->Settings-> set the File Playback Mode to Mixed
(You may also need to set the correct screen ratio for playback on your TV. Mine is 16:9 so I have the following MPlayer arguments entered under DVD->Settings->MPlayer arguments enter the following lines (separately) using Add Arguments.
Next open Terminal on your Mac, and log into the Apple TV using SSH
(I use Terminal on the Mac)
ssh -1 firstname.lastname@example.org
Enter ‘frontrow’ as password when prompted.
Go to the codec files directory by entering the following command:
You can list the contents of the directory by entering the following command:
The directory should contain all of the codec .component files installed on your ATV
Next thing to do is remove the Flip4MacWMVImport.component directory and all of its files from the ATV by entering the following command:
rm -R Flip4MacWMVImport.component
This will delete the component directory and all of the content files.
That’s it, you can now log out.
So now when you use the ATV to play WMV files they will start immediately and play smoothly using the Mplayer.
Hope this works for you all as this worked under the previous version of ATV Flash as well.