I can see the potential issue why some people are having difficulty getting iREB to detect that their device is in DFU mode.
It's because iTunes usually detects and auto launch itself whenever it sees the ATV2 connect via USB in regular mode or DFU mode.
However, iREB will fail to detect that the ATV2 device in DFU mode if iTunes is running.
This is the reason why the tetherboot program automatically kill iTunes.exe as well as iTunesHelper.exe before running it's exploit.
With that preface, here are my personal instructions. My version instructs you to put your device into DFU mode ahead of launch any program.
::SIMPLE STEPS to JAILBREAK IN WINDOWS::
1. Connect ATV2 to computer using USB Cable. !!!IMPORTANT: Do not connect the power cable.
2. Enter DFU mode first (See my way of entering DFU mode below)
3. !!!IMPORTANT: iTunes will detect the ATV2 in DFU mode and autolaunch itself. Make sure to kill the iTunes.exe process so iREB can detect the ATV2 in DFU mode.
4. Now, launch iREB and click on the "Apple TV 2" button. Disregard the instructions from iREB since you are already in the DFU mode. iREB will auto detect this in a second or two, as long as iTunes is not open.
5. Once iREB completes, iTunes should automatically launch. If not, you may launch iTunes and restore with the custom jailbreak firmware (Hold down shift, click restore and then browse for your custom restore IPSW file)
6. Finally, Do a tethered boot with tetherboot.exe and your iBSS and cache file. (Let me know if you need instructions on how to do this.)
::HOWTO ENTER DFU MODE::
Easiest way to put the AppleTV 2 device into DFU state...
- Plug ONLY the microB-USB cable into your ATV2 and computer *note1
- Immediate press and hold "menu button" AND "play/pause button" *note2
- Release the buttons as soon as you see the blink rate changes *note3
- Your device is now in DFU mode.
*note1: (Power cable, Network cable and HDMI cable should not be plugged in at this point)
*note2: (You have a couple of seconds to do this step)
*note3: (The change in blinking speed tells you when to let go. It goes from a steady blink to a faster blink. Roughly 6 secs after holding down both buttons. Let go once this point is reach. Entry into DFU mode doesn't execute until the buttons are released.)
I tested the method above multiple times on my Windows XP Laptop and it works like a charm. Let me know if you have any issues. Good luck.