I don't quite understand what the issue is - in other words is the unit unresponsive to remote ? Does it display anything?
If remote is unresponsive hold menu and left arrow keys together for around 6 secs - if the unit somehow thinks it's paired to a different remote it will ignore the one you are using. If this is the issue you may see a broken link icon appear on screen when it unpairs.
The unit has a problem and is instructing you to restore it via iTunes.
See this article and pay attention to the power (or lack of with AppleTV2) needed when doing this: