Hard drive speed for streaming video

Anyone run into a similar problem as this one:
I recently purchased the HD version of Quantum of Solace (great movie by the way) and I wanted to add this movie into the folder where I keep the rest of my movies. The "planned storage location" was on the MyBook drive connected to my timecapsule. All the SD movies (less than 1.5 G file size) will stream perfectly to my Apple TV. However, this HD file (~ 3.5 G file size) will only play about 10 seconds before the motion on the TV screen freezes. The picture freezing lasts about 5 seconds while the apple TV buffer catches up!
Right now, the solution to my problem has been to place the HD movie onto my computer internal hard drive and then tell itunes where to find the file. When I play the movie this way, it never misses a beat!!!
My guess is that the internal hard drive connection rate is faster (not USB) versus the external USB drive. Could is also be the drive speed? Any thoughts out there in cyber Apple TV land?
(P.S. I don't like to put the movies directly onto the apple TV hard drive simply because I will fill it up without even trying very hard - I own lots and lots of movies).
Regards,
imovie storage hog

both HDDs you have will be the same speed... ie 7200rpm.
the only difference between them is that one is internal (either IDE or SATA) and one is USB (1 or 2?)
if you external USB drive is only USB1 (or the USB port you have it connected to is only USB1) then that is much much slower than both your internal IDE or SATA connection and USB2

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