Resolution / hack found that seems to work (several have already reported this):
First, the actual topic of this post is about: "Apple TV 2nd Gen. slow streaming of movies stored in one's own iTunes library", whereas many have discussed problems with slow streaming of rented movies over the Internet, which is a completely different issue.
My post regards the actual topic, and I want to confirm that the workaround/resolution that others have already posted, completely resolved the issue for me to.
My iTunes Library is around 500 GB in size, with a large amount of movies and TV shows stored on my iMac i7, together with a ton of music. I have an Apple TV 2nd generation connected to my home theater, connected to the rest of my Mac's and the iTunes library via an Apple Time Capsule running 802.11n with good signal reception. I had the same experience as jprice126 reported about initially: Streaming content over the Internet to my ATV2 worked just fine, but trying to stream a stored movie from my own iTunes library over my internal network was just useless! It took forever to get even a short SD TV show to start, and it would still stutter frequently plus the video and audio being mostly out of sync.
I was at the point of starting to wire up my house with CAT-6 ethernet cabling and hook the ATV2 to a fixed GB LAN network instead, assuming it nevertheless had something to do with my WiFi network, but was puzzled that it worked fine watching even HD video over the Internet. Then I read about the fix others have reported (e.g. "lenw" replied on Jan 1 to this post), and tried that with full success instead:
- Enable home sharing on an iPad (works equally fine with an iPhone or an iPod Touch).
- Start Apple's Remote app from that device
- Use Apple's Remote app to control the Apple TV 2 and the content in the iTunes library that one wants to watch/listen to.
- And low & behold: it just works perfectly! Any movie starts within a reasonable 5-15 seconds, absolutely no stuttering at all, fast forwarding is a breeze.
I have no idea whatsoever why this workaround resolves the issue of streaming content from iTunes over the internal network to the Apple TV 2. There is no logical connection, but I can confirm that it really works 100%, and that's enough for me for the time being. I am sure that Apple will include a fix for this issue in one of the next SW updates for the Apple TV 2.