Finally you're AppleTV has the option to utilize an external drive as its primary storage device. A few months ago AppleTVHacks and FatWallet offered a reward for the first person to create a patch to allow you utilize an external USB hard drive. It was apparent that in time, someone would achieve this goal, and that goal has not been achieved.

You can read the instructions on how to apply the patch over at AppleTVHacks. You will need to enable SSH, copy of Intel extension folder and a unmodified mach_kernel.prelink file from your AppleTV.