Error 1601

No idea - there are no published error code lists for AppleTV. Any text errors it gives are usually cryptic and unhelpful.

You might search for OS X error codes and see if there's anything that sounds similar, but as AppleTV2 runs iOS the error numbers may well differ from iOS.

Unplug it and try again.

If it's not functioning properly after a failed update you need to hook it up to computer running iTunes via a microUSB cable and the restore the software to latest release version.

AC

Restore details:

http://support.apple.com/kb/HT4367

BTW Volume buttons on remote do not work for AppleTV2.