To fix this problem I disconnected the AppleTV box from my television and using a mini USB cable, attached the box via the cable to my PC. No other connections are needed for this procedure.
From the PC, open iTunes and see that the AppleTV device is recognized just as your iPad or iPhone would be. Click on it and in the right side pane should be the option to "restore.".
I don't know if this has happend to everyone, but I got my box via Amazon today (10/20/11) and as connected to my TV with wifi access it told me it was up to date per the menu update checker. But by looking in the About tab I could see it was loaded with ver. 4.3 and not 4.4.1. No matter what I tried it would not perform the update.
By going through iTunes on my desktop, it DID in fact update correctly to 4.4.1 and has been working perfectly ever since. I did notice an odd technical issue related to my wireless setup which uses a BrightHouse issue Motorola router/modem for their Roadrunner Lightning connection to which I have added a wireless repeater (Amped Wireless SN300) to extend the range. My PC, iPad, and AppleTv all work fine connected to the repeater, but they operate independently and do not recognize one another. I had to switch them all over to the main BrightHouse router/modem wifi for them to all be a happy communicating family. I'm not sure what that issue is about, but wanted to mention it for anyone else who may have that as an added piece of their hardware nightmare puzzle.
Hope this helps.