I ended up fixing it by doing the following:
On the Apple TV menu went to "computers" and deleted the link to the itunes database that is on my imac. The link was grayed out anyway so I think there could have been an issue of the appleTV and the computer linking to each other. Weird since I had this AppleTV and computer for years and never had a problem.
Anyway, then I created a new link, and the appleTV reappeared on the computer. The only problem with this is that when you delete the original link it also deletes all the music and files in the apple tv, so when created the new link I had to download all the music, videos and photos again, which took hours as I have a lot. But it works again and short of the time spent was only a nuissance. Hope this helps you, as I tried everything else before and nothing worked until I redid the linking between appletv and computer.