Can't get library movies to play

My configuration:

Windows 7

iTunes 11.0.1.12

AppleTV model MD199LL/A

AppleTV software 5.1 (5201)

Settings/General/About shows Activation Failed (unknown cause)

Active Ethernet connection (Netflix works, can see local computer, etc.)

Problem 1: How do I get it to activate & is it necessary? Everything except playing library movies seems to work.

Problem 2: Will not do software update...Step 1 begins (Preparing update...); status bar races to half way, then crawls almost to end, then stops; I get an Update Failed message.

Problem 3: I select Computers and my iTunes libraries come up. Select Movies and my titles come up. Highlight a title and the opening screen is displayed (I.e 20th Century Fox). Select the movie and where appropriate it gives me Resume Playing or Start From Beginning. Trying to play any movie results in the "processing" wheel/clock spinning, but then nothing happens till it times out. Thoughts on getting iTunes library movies to play?