Archived - Apple TV (1st generation): How to perform a factory restore
You can restore an Apple TV (1st generation)'s software from the main menu by selecting Settings > General > Reset Settings > Factory Restore.
An Apple logo appears with a progress indicator underneath it. Do not unplug the power cable from your Apple TV (1st generation) during the restore process. Your Apple TV will automatically restart when the restore process is complete.
You can also access the restore option and diagnostic software from the Apple TV Recovery screen. See How to run diagnostics for steps to access this.
Note: Using the Factory Restore will erase the network settings and any video, music, and photos stored on your Apple TV. You will need to set up a network connection and resync with iTunes to restore your content after the Factory Restore has completed.