I had a Western Digital HD TV payer and an attached USB drive with all my movies etc - which worked smoothly, fast and reliable with pretty much any file format. I wanted some additional functionality and got ATV with aTV Flash for it. The installation worked fine, but I get the same kind of freezing problems some reported. Further, and much more irritating:
-Apple TV is much, much slower in responding to commands with the remote, especially when navigating file folders and
-when playing movies, even just DVIX (not even 264H or HD material) the movie does not play smoothly and hangs every other second. Small things like clips in the region of <100MB play well.
I tried it with a movie I put directly on the ATV drive through FTP and it played just fine.
This makes me wonder if there is a general problem with the USB interface somehow? The USB port seems to be either too slow to pay movies or there is another problem?
If someone could help I would very much appreciate it!