Hi Janet.
I had this problem for ages too, and got no help from Apple.
I managed to fix it though. Not saying this will work for you, but it's worth a try.
For clarity, I have an Apple TV 2 updated to the latest system - 5.1 And I am using my late 2009 27" iMac (running Mountain Lion) to generate wifi from it's built-in card. I was fine with Home Sharing until 5.1, when it stopped working.
Anyway, I fixed it.
I went into System Preferences on my iMac. There, I clicked on 'Sharing', and then again on 'Internet Sharing', so I could go into 'Wifi options' down in the corner. When there, I clicked on the 'Security' dropdown. 5.1 means it only lists WPA2 Personal. But if you hold the option key and click the dropdown, you have a choice. I changed mine back to what it was before - 128-bit WEP. Then I entered the password, clicked 'OK', and re-checked the 'Internet sharing' box.
Now my Apple TV can see my iMac. It still seems a little slower when initially loading a film or TV programme, but it's reliable.
Let me know if this works, or if you have any questions. Good luck.