I bought a 160GB Apple TV 2 weeks ago and use it on daily basis. It plays Apple Lossless when it's on the internal harddrive but when I want to play it over the network I get a "Cannot play this song" error?
the tv does indeed play lossless format, you should post more details about what you are doing, the files themselves and any error messages you are receiving so that we may help you further.
I had all of my music in FLAC and converted them to Apple Lossless with a program called XLD. iTunes has no problem with importing/playing the entire library. When I try to stream it to the Apple TV it says that it cannot play the song. The weird thing is that the TV will playback songs when they're stored on the internal harddrive?!
I have exactly this problem, and I've been able to reproduce it in several ways.
Setup: I have approximately 300GB of Apple Lossless tunes on my Mac mini, running the latest versions of iTunes and Mac OS X. I have a brand-new Apple TV (running the Take 2 software update). I get the error "Apple TV cannot play the current song" whenever I try to play any of my lossless tunes. If I try to play an MP3 or AAC tune, everything works flawlessly.
I observe exactly the same behavior when I use my WinXP laptop (again, running the latest iTunes). It can see the folders being shared by my Mac. It can see all the tunes in my library. It plays MP3 and AAC fine, even protected AAC. It silently fails to stream anything in Apple Lossless.
There's something about streaming Apple Lossless over the network that's causing the problem.
Random double-checking: I've got some old music in my collection (originally on 78rpm discs, so it's low fidelity and mono). Those "lossless" files are exactly the same bitrate as some MP3s I've got of newer music (~200 kbits/sec). The MP3s play fine. The lossless files don't play. Also, all of this is flowing over a gigabit wired Ethernet. Bandwidth is not the problem.
The short answer: have iTunes "reencode" your Apple Lossless tunes as Apple Lossless (i.e., Advanced -> Convert Selection to Apple Lossless). Be sure to test this with a few files before doing everything. When you run it over everything, you will double the size of your library, and the new files will have exactly the same tags as the old files, making it tricky to delete the old ones. Be careful...
Apparently, "streaming" Apple Lossless is ever so slightly different from "normal" Apple Lossless. The built-in iTunes encode generates things correctly for streaming while the third-party service that I used and the third-party tool that diotav used did something else.
