Last night just as we were about to watch an already-rented movie, our AppleTV showed a notification that a software update was available, which my wife selected.
After the update was completed, it is no longer working with the iTunes Store. While we don't use these features often, it is especially frustrating that we have already paid for the rental and cannot watch it.
The Main Menu screen no longer shows our rental at the top. Selecting Movies or TV Shows from the main menu briefly shows the next screen with the menu across the top, but no content; after a few seconds, a spinner appears and it returns to the main menu. (It looks to me like a crash and recovery.) The main screen does show cover art and titles for the top movies and TV shows; selecting them fails as well.
Using Settings → iTunes Store → Check for Rentals shows a little spinner but just sits there.
We are still able to play content from our computer's iTunes Library, stream Netflix and Hulu, and use AirPlay without problems. From our computer, we can access the iTunes store just fine.
I have restarted it several time, both via the menu function and by unplugging it.
I attempted to fully restore it with Settings → General → Reset → Restore. It showed a message indicating that it was downloading software, but the progress bar did not advance. After several minutes, it again appeared to recover from a crash, and returned to the main menu, with all our settings intact.
AppleTV 2 (Model MC572LL/A);
Software Version 5.2 (6010.96)
Best Answer
I was able to accomplish a restore by plugging the AppleTV into my computer with a Micro USB cable, and using iTunes to restore it.
(I kept digging and found this article: http://support.apple.com/kb/HT4367)
After doing the restore, re-connecting to my Wi-Fi network, and putting in our iTunes account info, the rental showed up immediately, and we can browse the store content again!
Still haven't had time to watch it the movie, though...
Edit: We were able to successfully watch the movie last night.