Apple TV 1st gen stuck in infinite loop

Hi
This has probably been covered a few times but the only answers I could find was from an archived discussion.
The other day I was given an Apple TV 1st gen, it had not been used for quite some time, and decided to upgrade the software, when I noticed it still had old pictures and music on from the previous user, not wanting to keep these pictures, I decided to reset the machine to factory settings, which it did, but on the restart it was stuck at a loop giving me a code to enter into iTunes, and then resetting and giving me a different code.
i've tried several resets of the settings, holding menu and - together, but still having no joy.
Its never been tampered with, but its really annoying me.
Can anyone help? this is a very old product so figure something might have been done during this time
Cheers
Dave

sounddave,
I have been in the middle of the same problem for months.
I think the problem is with the software version that the older 40GB Apple TV's revert to after the factory restore.  Mine reverted to version 1.0, and that is when the loop started happening.  Since when did a factory restore become a factory paper weight creator!
I read somewhere that the Apple TV looks at an Apple server and the older software doesn't play well with the updated server causing it to keep rebooting.  I'll try to find a link about this if I can find it again.  I remember reading that it happened to a bunch of people with older Apple TV software on a particular day that Apple upgraded their server.
If you don't let your Apple TV connect to the internet, it will stop the infinite loop, but it also means you can't upgrade your software.  I haven't tried it yet, but it also might be an issue with newer versions of iTunes.
I tested this by unplugging my router, and the Apple TV stopped looping.
I tried to fix this before without success, but I am really determined this time.

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