I tried updating the firmware on the ATV2 and ended up with the screen to plug the USB into my mac. I tried multiple times with both a Macbook Pro and a new 27" iMac. I tried it through iTunes using an Amazon micro USB cable and also the Kindle micro USB cable. I also tried it both ways with and without the power cable attached to the ATV2. I got an error each time saying the ATV2 was not eligible for update and a blinking light.
This is finally what worked for mine.
I went into Windows XP with Vmware Fusion and installed a brand new copy of iTunes. I plugged the ATV2 with just the micro USB cable and let iTunes update the firmware. It worked.
I got mine in best buy rocket fish for 20 bucks well thats way expensive i had no choice but i order mine in amazon for 5 bucks one is 6 ft and the other one is 10 ft... Once i received this in mail. I will return the expensive one. Yeah it works just hook it up to ur itunes and it will update. Im pretty sure u will get an error.. Ignore the error then plug it back to ur TV... When u check the update it will tells u ur ATV2 is up to date... Gudluck!!!