Unable to stream video on Apple TV (2nd generation)

Just bought an ATV2 and I'm experiencing an odd problem: I can stream audio but not video.

My Mac desktop computer is in a different room from my ATV2 and TV setup. I downloaded the Remote App onto my iPhone, turned on Home Sharing, and things work fine for the most part. When I use the Remote App to stream music and audio podcasts to my TV, I have no problem. But when I try to stream video from iTunes (including movies, music videos, and TV shows I purchased in iTunes on the computer) the videos start playing on the computer instead of the TV.

In other words, the Remote App on my iPhone seems to be controlling the ATV2 for audio content, but it's controlling the computer for video content.

All my video content in iTunes is in the .MP4 format. Can't figure out what step or setting I might be missing.

Any thoughts on this?

Thanks!

Eric