After playing around with the Apple TV 2 for a few nights, this error gave me a bit of a headache, and not many people seem to have posted a fix. After playing around I managed to get a fix.

1 – Download and install WinSCP - http://winscp.net/eng/download.php

2. Open WinSCP Put in your details and Press Login
Host Name = ‘YOUR ATV2 IP’ (e.g. 192.168.1.101)
User Name = root
Password = ‘YOUR ATV2 PASSWORD’ (default is ‘alpine’ no quotes)

3.  Navigate to /private/etc/apt/sources.list.d

4. Open xbmc.list

5. Change:
.deb http://mirrors.xbmc.org/apt/atv2 ./.
TO
#echo http://mirrors.xbmc.org/apt/atv2 ./.

6. Save and reboot ATV2

7. If all has gone well this error should now have gone when installing or updating Apps