Was the latest updated version of software it received an iOS 6 based variant? Might explain a couple of things it was.
No, the original Apple TV was based on a Pentium M processor, meaning its running a modified Darwin (OS X) Kernel. The 2nd (A4 ARM) and 3rd Gen (single core A5 ARM) all run a modified iOS Kernel because its ARM based, not x86 based.
This is really bothering me. First, iTunes Internet Radio no longer works, then FaceTime no longer works on devices running anything older then 6.1.6, then the Apple TV can't connect to iTunes. WTH is going on Apple?