This guide will help you with the following:

Disabling the Firewall
Enabling SSH & VNC
Playing xvid/divx encoded stuff
Stopping Watchdog
Running Applications(Firefox, Centerstage, etc)
Installing Quart
What you will need:

1 Computer(pref. Intel Mac)
a torx 10(for the case) and a torx 8(for the hard drive)
A way to hook up a 2.5” hard drive to your computer(can be found at bestbuy or radio shack ask for a “2.5” hard drive enclosure”
A method of SSHv1 into a box(linux and mac have built in, windows can use putty get Putty and pSFTP)
Notice: This will require opening up your precious aTV however, I talked to people for about 48 hours straight and have not heard of one incident in bricking(breaking the console) so it is fairly safe, only wierd side effect was on non x86/x64 architecture. I can guide you through it personally if you need it as long as I don’t get overwhelmed. However I take no responsibility for any actions in this guide, it was a educational project for me.

The How-To

Gaining physical access to the hard disk


Flip the unit upside down and start pealing off the matt at the corners. You can always buy a sprayable adhesive to fix the matt being lose, if you wish. This is the torx 10.
Now it would be smart to unscrew the hard disk the screws are also under the matt which means you need to peal the a little more of the area off you should see some of the extra screws when you peal the corners, this is a torx 8.
Now take out the hard disk, and unplug the cable.
Hook the hard disk up to your pc
Disabling the firewall:
Create the directory: /Volumes/OSBoot/System/Library/StartupItems/fw/ the apple tv’s your hard disk.
Create the file StartupParameters.plist in this folder with the contents
{
Description = “Firewall”;
Provides = (”Firewall”);
Requires = (”Network”);
OrderPreference = “None”;
}
Now create the file fw in the same directory with the following
#!/bin/sh
/sbin/ipfw -f flush
/sbin/ipfw add 65535 allow ip from any to any
Enabling SSH
Obtain a intel build of sshd, this is at the /sbin folder of a intel mac
Copy it to /Volumes/OSBoot/usr/sbin/
obtain the file called: ssh.plst(here) and copy it to the hard disks “/System/Library/LaunchDaemons/” folder
You can now access the command line of your box once you assemble it, the password will be frontrow for everything:
ssh -1 frontrow@IP.Of.Your.aTV
sfto -1 frontrow@IP.Of.Your.aTV
Assemble the aTV back up, we have full access to the HD(except recovery partition) so there is no need to take it out again
Enable VNC
SSH into your atv and run the following commands:
echo 71463E00FFDAAA95FF1C39567390ADCA > /Library/Preferences/com.apple.VNCSettings.txt
sudo /System/Library/CoreServices/RemoteManagement/ARDAgent.app/Contents/Resources/kickstart \
-configure -clientopts -setvnclegacy -vnclegacy yes
sudo /System/Library/CoreServices/RemoteManagement/ARDAgent.app/Contents/Resources/kickstart \
-activate -configure -access -on -users admin -privs -all -restart -agent -menu
Get Chicken of the VNC or another vnc client and it should work with your iTV, you can control applications such as firefox from it since there is no usb support yet… the password is frontrow
Installing xvid
Go to Perian and get the quicktime component
Put the .component file in the /Library/Quicktime … I use sftp to do this.
xvid now can be played, but it won’t sync with iTunes, Read on for the center stage installation to get it playing that xvid easily.
Stopping Watchdog! So you can run other apps!
SSH into your box issue the following commands:
sudo mkdir /etc/mach_init.disabled
sudo mv /etc/mach_init.d/ripstop.plist /etc/mach_init.disabled
shutdown -r now
*let it reboot and ssh back in takes ~1 minute*
sudo kextunload -b com.apple.driver.AppleTCOWatchdog
Note: You will need to do the kext unload after each boot which isn’t too much of a hassle since it doesn’t even have a reset button. If you really hate it look into scripting it in either the rc.d or startupitems.
Removing frontrow so it will not take full screen!
Rename Finder which is really frontrow!
cd /Volumes/OSBoot/System/Library/CoreServices
sudo mv Finder.app Finder.app.sav
When you reboot now the desktop won’t change to the front row it will stay at the black screen with apple logo don’t forget to issue the command to unload the kext if you don’t have it run at start up!
kextunload -b com.apple.driver.AppleTCOWatchdog
Replacing frontrow with Centerstage(in order to play your xvid’s easily!), this may not have a lot of eye candy but it is open source and will get developed much faster now that this is a easy thing to run on aTV
Download centerstage
Put centerstage in your /Volumes/OSBoot/System/Library/CoreServices as Finder.app This will make it so it will load at boot up!
To Run Any File!
put the .app onto your atv’s hard disk
cd *the directory its in*
open “appname” such as ‘open firefox.app
Optional: Install Quartz(may get a few higher fps)
Get Quartz debug from here
Copy it to your AppleTV.
VNC into your Apple TV
Open the Quartz debug
Go To Tools –> Enable Quartz Extreme and then go to Tools again, this time select Enable Quartz 2D Extreme.
Extra info
if you ever are getting an error when trying to edit or upload a file issue this command: ’sudo mount -uw /’
put nano into your /usr/bin to get a text editor!
My Todo:

Get USB working so people can play WoW comfortably
Create a launcher gui to replace finder that will launch Centerstage, firefox, etc.
Afterthoughts:

They tried to stop us from running 3rd party apps. Just like they say the iPhone won’t do… I really hope it’s the same way
It may seem like they put no protection since this is by far easier to mod then consoles. But it did take us about 20 hours to get it hacked the way i explained in this tutorial.
Special Thanks:

MrCurious: Ruling out many methods and testing several before I got my aTV.
n8manAfter: Testing and willingness to try anything
My wonderful fiancée for not being upset that all my time went into appleTV and not life.
Confirmed Working Apps:

iTunes
VLC
CenterStage
Firefox
Quartz
Nano
World of Warcraft
Joost(currently fonts don’t work but you can watch videos)
Many More!