FYI..I had the upgrade done in a Mac repair specialist's. It is quite a common upgrade. You can see that on the net that a lot of people do it.
They said that all they did was replace the HD with the bigger one (320Gb) that I supplied, and cloned the ATV software partition onto it using ATV Cloner. I just connected to power, and TV (HDMI), and it started OK, then asked me to enter the password for my WiFi, then the 5 digit code in iTunes to pair it. All went OK.
It was actually syncing by wifi, but as my old 160Gb was full, I thought it would take ages, and decided to connect via ethernet cable.
The first time, I connected to my Netgear router, and got the message about port 49152. I then connected directly to my iMac, and got the same message.
It has been running all afternoon, syncing by WiFi, and only synced nine films 13Gb, so I just tried connecting once more through my router.
It now says that it is syncing, "Copying 1 of 5805", but the capacity at the bottom of the iTunes page, where it says Video, Audio, Other, Free, does not seem top be increasing. In the side column the download wheel is turning next to the ATV. I have not changed any settings since my earlier post, and am not sure if it has resolved itself.
I shall wait, and see what happens, and report back here later.
In the meantime, thanks for any help / advice given.