[crashnburn]

Assuming you have the smart update or whatever it's called installed and have mouse abilities, hook up a keyboard and mouse (use a hub) and use something like Disk Utility.app (transfer it over using SFTP).

I am not familiar with this Smart Update? How can I install this? Does it install via ATV menu where Xbmc is installed?

DiskUtility? From OSX? Will I be able to run that on here.. How?

I had heard that this thing was running in a lighter version of OSX?

Or you can just open up the ATV1 and use an inexpensive PATA-to-USB adapter. Those are a life saver for so many situations. Get the ones that does 2.5/3.5 PATA and SATA.

I'd prefer not to go that direction.. Lets hope I can understand the FORMER method.. from your guidance.