I think the product as a whole is still spotty. I checked the Apple forums and it looks like a ton of people have this problem. Frustrating because I go through the problem of converting my .avi files (I'm assuming you can guess where I got those) for TV shows to itunes formats and I still can't watch them on my TV.
Strange. Did you use handbrake?
I use handbrake
, select the "apple tv 2" preset. Click convert. And that works.