Alright so I gave it another shot and also tried your commands and this is what came up.
Apple-TV:~ root# apt-get update && apt-get install org.xbmc.xbmc-atv2
Get:1
http://apt.thebigboss.org stable Release.gpg [197B]
Hit
http://apt.saurik.com tangelo-3.7 Release.gpg
Hit
http://apt.awkwardtv.org stable Release.gpg
Get:2
http://apt.modmyi.com stable Release.gpg [189B]
Get:3
http://cydia.zodttd.com stable Release.gpg [189B]
Get:4
http://apt.thebigboss.org stable Release [9315B]
Ign
http://mirrors.xbmc.org ./ Release.gpg
Get:5
http://nitosoft.com Release.gpg [487B]
Hit
http://apt.awkwardtv.org stable Release
Hit
http://apt.saurik.com tangelo-3.7 Release
Get:6
http://cydia.zodttd.com stable Release [1619B]
Get:7
http://apt.modmyi.com stable Release [1328B]
Get:8
http://nitosoft.com Release [277B]
Ign
http://mirrors.xbmc.org ./ Release
Hit
http://apt.awkwardtv.org stable/main Packages/DiffIndex
Ign
http://apt.saurik.com tangelo-3.7/main Packages/DiffIndex
Ign
http://mirrors.xbmc.org ./ Packages/DiffIndex
Get:9
http://apt.thebigboss.org stable/main Packages/DiffIndex [2172B]
Get:10
http://apt.modmyi.com stable/main Packages/DiffIndex [3756B]
Hit
http://apt.saurik.com tangelo-3.7/main Packages
Hit
http://mirrors.xbmc.org ./ Packages
Get:11
http://cydia.zodttd.com stable/main Packages/DiffIndex [3756B]
Get:12
http://apt.modmyi.com stable/main Packages [1291kB]
Get:13
http://cydia.zodttd.com stable/main 2011-02-20-1712.55+2011-02-20-1811.59.pdiff [1530B]
Ign
http://nitosoft.com Packages/DiffIndex
Get:14
http://cydia.zodttd.com stable/main 2011-02-20-1712.55+2011-02-20-1811.59.pdiff [1530B]
Get:15
http://cydia.zodttd.com stable/main 2011-02-20-1712.55+2011-02-20-1811.59.pdiff [1530B]
Get:16
http://nitosoft.com Packages [2871B]
Get:17
http://cydia.zodttd.com stable/main aptbug545699+2011-02-20-1811.59.pdiff [58B]
Get:18
http://cydia.zodttd.com stable/main aptbug545699+2011-02-20-1811.59.pdiff [58B]
Get:19
http://cydia.zodttd.com stable/main aptbug545699+2011-02-20-1811.59.pdiff [58B]
Ign
http://cydia.zodttd.com stable/main aptbug545699+2011-02-20-1811.59.pdiff
Get:20
http://cydia.zodttd.com stable/main [1403kB]
Get:21
http://apt.thebigboss.org stable/main 2011-02-20-0712.08+2011-02-20-2333.05.pdiff [1733B]
Get:22
http://apt.thebigboss.org stable/main 2011-02-20-0712.08+2011-02-20-2333.05.pdiff [1733B]
Get:23
http://apt.thebigboss.org stable/main 2011-02-20-0712.08+2011-02-20-2333.05.pdiff [1733B]
Fetched 2724kB in 16s (165kB/s)
Reading package lists... Error!
E: Write error - write (28: No space left on device)
E: Can't mmap an empty file
E: The package lists or status file could not be parsed or opened.
Apple-TV:~ root# apt-cache policy org.xbmc.xbmc-atv2
E: Write error - write (28: No space left on device)
E: Can't mmap an empty file
Apple-TV:~ root# apt-get -s install org.xbmc.xbmc-atv2
Reading package lists... Error!
E: Write error - write (28: No space left on device)
E: Can't mmap an empty file
E: The package lists or status file could not be parsed or opened.
Apple-TV:~ root#
Immediately I see if says there is no space left on the device. How can this be if the device has 8 gigs on it? I have only downloaded 4 add ons and only have 8 movies and 2 albums on my imac for which it has pulled the movie/music info. So now I guess two problems. How do I update and how do I clear room on my apple tv2?