A critical thing to point out is that this is a version 2 AppleTV, version 3 AppleTV's haven't been jailbroken yet so if you're going to attempt at putting XBMC onto an AppleTV that you're going to buy ensure it's a version 2. Here's a video I found which explains which version is which.
Items you'll need to complete this task;
-AppleTV version 2
-Computer running Windows with iTunes installed (I used Windows 7 Ultimate and iTunes 22.214.171.124. NOTE: you can also do this within OS X but these instructions only cover using Windows)
-Micro-USB cable (do NOT use a usb hub or usb extender)
First you'll need to download the 5.3 ISPW file, I got mine from here: atv 2 5.3 ISPW
Download that ISPW file and store it on your desktop for now. In order for us to downgrade the software on your atv 2 we'll need to get the device into DFU mode. Connect power to your atv 2 as well as connect the micro-usb cable to the back of the atv 2 and the other end to your computers usb port. Using the atv 2 remote hold the menu button along with the play button for approximately 10 seconds until the light on the front of the atv 2 starts blinking. If you did it correctly iTunes window should appear and state that your device is in recovery mode. That's what we want. If yours does anything like mine it wasn't as easy to get it into DFU mode as it sounds. The following steps are what worked for me:
-Press menu+down for around 10 seconds and you'll see the light blink, this restarts the atv 2
-Remove the power cord from the back of the atv 2 (it's still receiving some power from the usb plug)
-Press menu+play for approximately 7 seconds or so (this should put it into DFU mode)
-Replace the power cable and continue
iTunes should now show that your device is in recovery mode.
It's now that you hold the shift key on your keyboard and click on "Restore Apple TV...", navigate to where you stored the 5.3 ISPW file (your desktop if you followed along) and double click it, click Restore. iTunes should now be restoring your AppleTV 2 to software version 5.3. After approximately 5 minutes iTunes will inform you that your device has been restored.
You can now unplug the micro-usb cable and connect the HDMI cable to your TV. You'll be presented with the screen where you choose the language you want your AppleTV 2 to be and proceed thru the setup and that's it. You're done. Your device is now running software version 5.3 and is ready to jailbreak.
I may create a blog post covering how to jailbreak your AppleTV 2 but it all depends on how busy I am.