I cannot seem to insert an optical audio cable into the Apple TV it will not seat.

Make sure that the cable that you have is in fact an optical audio cable and not a mini optical cable or other type. Also check that you have removed any plastic caps from the end of the connectors.

This answer helped me too. But let me clarify it a little. A new optical cable is likely to have small rubber caps on each end. They're so small you might not think they're caps. They look like a white LED. But they're soft, and they will pull off. Until you remove these caps, the cable won't seat in the jack.