Network drop out with Apple TV2

OK, so let me describe the situation and symptoms that I am currently experiencing....
Recently I just purchased a MacBook PRO and so with that wanted all the accessories etc. etc. Just a couple of days ago purchased an ATV2.  It sets up on the network fine, can see my computer and library all fine.  I can stream from YouTube on the ATV2 and also watch trailers etc.  However, when I goto my library and select something like a song or a movie, it loads... brings up the next screen, which is like the now playing screen, then goes back to the main menu page detailing that the ATV2 is not connected to any network... happens every time, I have not been able to listen to or watch one single thing.  Really got me stumped.... would love some suggestions....
MacBook PRO - 2.3 GHz Intel Core i5 - 4GB RAM, 1333 MHz DDR3 (MAC OS X - 10.6.7)
Apple TV V.2 - OS 4.0
Router is a D-Link - DI-524 - Air Plus G - 802.11G - 2.4GHz Wireless Router

I'm going to update the ATV 2's OS from 4.0 and go from there..... after reading a few different threads in the support forum, it seems not to be a router or network issue.... would still love to know and here any insight from people that have experienced this problem and what they did to get through... thanks

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    ADSL Line Status
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    Connection time:
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    Downstream:
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    Upstream:
    448 Kbps
    ADSL Settings
    VPI/VCI:
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    Type:
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    Modulation:
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    Latency type:
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    Noise margin (Down/Up):
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    Line attenuation (Down/Up):
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    Output power (Down/Up):
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    CRC Events (Down/Up):
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    Loss of Signal (Local/Remote):
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    Loss of Power (Local/Remote):
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    HEC Events (Down/Up):
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