Great, now the combo update has been downloaded to the Documents folder. Go to your Apple TV menu and go NitoTV -> Settings -> Install Software -> Smart Installer
This will take a minute but when its done you can plugin USB drives and your Apple TV will recognize it. Volia!
TO ENABLE playback RMVB
go NitoTV -> Settings -> Install Software -> Install mplayer Codecs
Please restart your APPLE TV and you will be able to look for your USB drive in the Menu under Nito TV --> Files
Enjoy... Great way to play back all my download which were RMVB extension.