I’ve been able for some time successfully to play movies via XBMC on my first generation ATV. All video is accessed via an SMB mount to my unRAID server. But…
I’ve never been able to get XBMC to play video on my ATV2 (iOS 4.2.1) though all movies and their folders are, of course, visible. It pauses a bit, then flips me back out to the main screen.
BTW, some have suggested that the Media Player in the most recent update is another option, but one thing I kinda like about XBMC is the downloadable and installable subtitles option.