Thats interesting, I watched a avi divx movie last night from a 500gb attached to the usb port of my apple tv last night. Oh, yea...I forgot its hacked. Go here
http://wiki.awkwardtv.org/wiki/Main_Page and read. I did take mine apart to access the drive, it was really easy though, but i hear there is a way to hack it without taking it apart. It is not as smooth as a stock atv but i can do all sorts of things with it now. I can even stream drives from my airport extreme and manage my atv file with the finder. GOOD Luck!