I was having the same issue. So I tested by just using the hostname of the ATV and it worked. See bellow
When connecting to the ATV try using the hostname instead of the IP so ssh root@apple-tv.local That’s the default name so unless you have changed it that should work.
Hope this helps!
Cheers.
And I’m running 4.4.4 ATV just thought I’d add that. Sorry
For anyone who has this problem, most routers have an option (might be default) to prevent wifi devices networking with other wifi devices. Make sure at least one of the two devices is plugged into the ethernet port and see if that works before anything else.
Also if you’re on a Mac, go into your User/USERNAME/.ssh folder and delete the file called “known_hosts.”
Thank you for the input from everyone. Since I was able to use Putty to initially install NitoTV, I didn’t think it was a router or an incomplete jailbreak. I thought maybe that the previous Putty session was not completely disconnected so I restarted my computer and reset the apple tv 2 by disconnecting the power, ethernet and hdmi cable and then reconnecting everything.
After doing this, I was able to ssh via WinSCP using the the regular ip address, username and password.
Did this but did not work. How do I undo do this now?
SAME PROBLEMS :S.
I have Apple TV 2 4.4.4 9A406a. Followed all of this completely. I actually do not have a SSH folder. USER/mycompname/ then no .ssh folder. :S
Reinstalled Seas0nPass, updated Seas0nPass. Ran the process three or four times. Plugged in my computer directly to the router. Made sure the router has AP isolation disabled. Cannot SSH. Downloaded CyberDuck same story.
Then tried PwnageTool 5.0. It does not recognize the IPSW firmware bundle as “AppleTV2,1_4.4.4_9A406a_Restore.ipsw” So can’t even re jail break with Pwnagetool. 
someone please help out with this.
Experiencing the same issue on my ATV2 after applying the updates. I was connected previously via ssh, did the updates and now can’t ssh. Was about to install XBMC plugins, but can’t now.
Many of us have been experiencing the same SSH issues- and we have tried just about every way to get in. There is still a way you can get your XBMC repos & plugins in there though- read through the threads.
This has happened to me a few times… installing stuff through nitotv turned out to be the culprit
Interestingly I have this issue also. However, I did the jailbreak two days ago, installed NitoTV via SSH and some repository ZIPS. I installed loads and no problems so it isn’t the jailbreak. I didn’t have to open any ports up either.
When I came to install some other software last night, I got this error message and get it whatever software I use to try to get in. One thing though, I can still get zip repositories installed by getting the ATV 2 to access them with XBMC from my laptop over the network… I just can’t SSH at the moment.
Edit: Unplugging everything did not work. I also tried SSH software from my iPad - no luck 
I’m not sure what the culprit is- but I did follow the directions from a few posts back, updated and restored to Apple TV’s in iTunes, then read jailbroke them. I also have purchased the TV black flash, and installed that was no problem after the jailbreak. I then went into maintenance and installed everything but except Nito, which I did at the very end. I did not go in or open Nito, but instead opened up my SSH connection with Cyber Duck. I had a folder saved on my desktop full of repositories and plug-ins, and they were uploaded without a hitch.
I then exited out of Cyber Duck and opened up Putty. I logged in with the default “root” and “alpine”, but once I got in, I typed in “passwrd”,
Hit enter and it asked me what I wanted my new password to be… I did successfully change the password, typed “exit”, and the program closed. So far, I am able still to use both Cyber Duck and Putty.
I really miss having the BT stack keyboard, but I found a thread explaining how to get it working (again, using Putty). Works like a charm so far.
I have read on other sites that some people believe the iPhone virus/worm Ikee had spread to the ATV 2 after jailbreaking. The solution they say is to re-jailbreak then change the SSH password straight away.
I haven’t tried this yet as some people are not convinced. However, it might be worth a try. Judging by the last poster’s experiences, this could have been their issue and now solved with another jailbreak and changing the password. The virus prevents further SSH usage.
I am thinking about it but jailbreaking took about 6 attempts so I am not rushing into it! As I said, I can sill do everythng else and get new stuff on there - just not via SHH.
Here is a link to more information about the virus/worm:
http://nakedsecurity.sophos.com/2009/11/08/iphone-worm-discovered-wallpaper-rick-astley-photo/
I don’t have a Rick Astley photo on my ATV 2 though 8) but some iPhone people don’t either and they are still infected.
It affects just jailbroken idevices apparently.
If anyone experiencing this issue is running aTV Flash (black) submitting a bug report may be helpful in tracking down what’s going on.
FWIW - To date, we’ve had no bug reports submitted regarding this issue.
Per the post above, i too did not have a photo on my ATV. I did however notice some strange things happening with my iPhone- and that was my real concern. I have no idea if they were related or not, but my iPhone kept asking me for passwords on all of my email accounts and my Apple ID. I performed the virus removal instructions but had not re-jailbroken my ATV yet- the problem went away while the Apple TV was unplugged but as soon as I plugged it back in by the end of the day -my phone was doing the same thing. I should mention that the phone never had a picture on it either.
I too had difficulties with the jailbreak the first time but this time it went very smooth. My Windows computer did have three important updates I installed prior to the jailbreak as well as an iTunes update. I restored both Apple TVs to their original condition and they were updated to latest firmware. I also had the latest version of TV Flash , and a fresh copy of SeasonPass, Putty, and Cyber Duck on my desktop.
I do want to make it clear that I am not saying this WAS a virus- but after reading the possibility that it could be a virus I didn’t want to take any chances myself. Again it went very smooth and there was no lagging or delays as there were the first time.
I do feel it is a wise decision to change our root password on our ATVs.
One thing which I am sure you are already aware of James is that anyone with this problem won’t be able to install ATV Flash Black until the problem is resolved!
That may be true, but at the same time we’ve not had an abnormally high number of users reporting trouble installing or updating aTV Flash (black).
So, this could mean…
I just wanted to update: I am still able to SSH via CyberDuck, Putty, and on my Mac, Terminal. No issues.
This seems to add some weight to the virus/worm possibility. I think I will re-jailbreak this weekend and change my password ASAP. Whilst everything else works and I can install repositories via my laptop, I would like the potential for using SSH if I want to.
Thanks for the update icathchaos, it will help others.
James: I do not feel that this issue has any relation to ATV Flash black, except new users with this issue I do not feel will be able to install ATV Flash black unless they resolve the problem; potentially by re-jailbreaking and changing the password ASAP.
You’re welcome ArmyMedic007. I hope it helps. I am a huge fan of both TV Flash and SeasonPass- and am very grateful for their hard work- what the culprit is…I don’t know- but I do know that by changing my password (before going in Nito TV)- my SSH issues seem to be resolved. And I agree- new jailbreakers should really change their ATV passwords straight away. It’s advisable anyway- and it will save you having to re-jailbreak if your SSH capabilities are affected.
-an ounce of prevention is worth a pound of cure.
To James:
I am guilty of not submitting a bug report- I had already re-jailbroken before reading about this. If I have any further issues (if it is indeed a bug), I will submit one. 
Thanks again.