Just wanted to add another user to the discussion with the problem. I have 3 of the previous 720p units, two of the latest 1080p model.
I purchased all 21 of the Bond movies last weekend when they had the HD versions for $9.99. On the 720p model, they all get the error unless I change to SD in the iTunes setup. I've tried all suggestions from this thread, other threads here, and other threads on the Internet. The only solution is that I change to SD. (Defeats the purpose of an HD purchase)
There are no problems with the 1080p units playing this content. The Bond movies load in SD/720/1080 with no problem on the newer Apple TV unit.
I purchased other movies and tv seasons that same day, and none have the problem. My summaries are below:
1.) The issue is only with certain content. Why are ALL 21 Bond movies having the issue, but nothing else bought that day? Is it Studios? A different authentication, code or handshake depending on the studio?
2.) Other than a processor bump, why is the issue there on the 720p, not the 1080p. Is the iOS code exactly the same on each unit. And if so, does it come down to some type of chip/switch inside 720p units?