Remember to download the correct firmware 5.3 for your Apple TV. Firstly identify which version of the Apple TV you have using the following Apple web page:
http://support.apple.com/kb/HT200008?viewlocale=en_US&locale=en_US
Once you know which version you are, choose the correct link.
For the latest Apple TV 3 which has a model number of A1469 choose:
http://appldnld.apple.com/AppleTV/091-5259.20130618.90Rft/AppleTV3,2_5.3_10B809_ Restore.ipsw
For the original Apple TV 3 which has a model number of A1427 choose:
http://appldnld.apple.com/AppleTV/091-5257.20130618.Eu5uy/AppleTV3,1_5.3_10B809_ Restore.ipsw
Apple TV 2 customers should choose the following:
http://appldnld.apple.com/AppleTV/091-5256.20130618.MagBg/AppleTV2,1_5.3_10B809_ Restore.ipsw
If you are having problems putting your Apple TV into DFU mode, watch the following video:
www.youtube.com/watch?v=DkLNldbvExs
Can I also suggest that you power off your Apple TV before connecting it to your computer and placing it into DFU mode. If it does not go into DFU, turn off the Apple TV before turning it back on, wait 1 minute or so for the Apple TV to boot back up before again attempting to put it into DFU mode. Sometimes even cycling the power without waiting helps kick it in.
Just to reiterate my instructions from my post above,
Follow the following instructions:
1. Download the appropriate Apple TV 5.3 firmware for your Apple TV using the links I have supplied above.
2. Turn off your Apple TV.
3. Launch iTunes on your Mac or PC.
4. Insert a micro USB cable from the Apple TV into your Mac or PC.
5. Turn on your Apple TV.
6. Place your Apple TV into DFU mode (Menu and down button on your remote together). If you have problems with this, see the above notes about DFU mode.
7. Apple TV should hopefully now show in iTunes. When clicking the restore button, hold down the option key so that you can select the 5.3 firmware you downloaded earlier and install this onto your Apple TV.
5. Wait for the above to install and you are now back onto the 5.3 firmware.
6. Reconfigure your Apple TV (e.g. Netflix account, YouTube account, general settings, etc). This should only hopefully take a few minutes.
Welcome back Dolby Digital!