After updating apple TV to the latest version one cannot accept the license agreement.
Update an IOS device such as IPAD or Iphone (updated my iphone 4s) to the latest version and accept the terms and conditions after the IOS 6 install. I know, I know, you have to update another IOS device to a flawed version of IOS to fix another flaw!
This rectifies the issue with Apple TV.
As a side effect of this my photoshare was now showing 0 photos.
Tried resetting the photoshare from www.icloud.com = failed
Tried resetting the apple TV unit and setting up again = failed
Tried disabling home sharing on the windows XP PC with iTunes and re-enabling = failed
Tried pointing the "share photos to cloud" to another folder on XP = failed
I had to download the iCloud app onto my other PC running windows 7 (its not supported on XP!!!)
Logged into the app and it displayed that photoshare was now disabled, What The F....?
Re-enabled photoshare and pointed it to a folder with the pics on the Win7 PC = failed
Once I enabled photoshare on the Win7 PC I had to copy all the photos into the UPLOAD folder and sure enough that started to slowly copy the files upto icloud so apple TV could see them.
So basically the photos I had shared under windows XP with itunes was now defunct and cannot be used to populate it until you have a win7 PC setup and sharing the pics.
Fixed = yes seriously fecked over from apple? YEP
Hope this works for you chap.