Video freezes and stutters on my AppleTV 2 and sound is broken.

Watching your video with occasional hick-ups spoils a lot of the fun. There are several reasons why this might happen. So don’t despair. There is a lot you can do, to solve this annoying problem. The key is not to run around like a crazy hip shooter, but work on it in a systematic manner:

Video freezes or stutters.

First make sure your video does not exceed the limits of AppleTV’s specification. The processor in your ATV is certainly not as powerful as the processor in your computer. So maybe your video plays nice on your computer, but not on your ATV.
Here are the specifications of the AppleTV gen2:
Resolution: 720 pixels main@level3.1
Average video bit rate: 6300 kbs
Frame rate: 23.976 frames/sec and 25 fps
Audio: 640 kbs AAC @5.1 sound
Please note, that according to several sources a frame rate of 30 fps is not supported!

To check, if your video does not exceed the specification, you might use the program MediaInfo. Download it from from sourceforge and open your video file with it. MediaInfo shows a lot of information on your video file. But you only need to concentrate on the four items mentioned in the spec. above. Bit rates of video and audio should not exceed the spec. limits. A framerate of 23.976 is preferred. Different encoding is not supported: for example the popular dts encoding for surround sound on BlueRay is not supported and must be converted to aac.
In case your video demands too much from your ATV, use Handbrake (- which you can download from the Handbrake website -) to convert it to a format that is compatible with your ATV (ATV 2 in this case).
If by now the problem is not solved, move on to the next step:

Video freezes when running from iTunes.

For iTunes your video must be in an iTunes compatible format (extension .mp4 or .m4v). So if it is for example .mkv, convert it with Handbrake. When your video file has the proper format, the video can’t be the cause of the problem. If you are playing from a NAS (a Network Attached Storage), there is a fair chance your NAS is too slow. Copy your video to the (external) harddisk on a computer and run it from there. If now the problem is solved, you know it's cause.

If Video is OK, where to look next?

It's also possible that your wireless network connection is not fast enough. Best option is to use a cable or a WiFi router on 5GHz and dual channel. However if the distance between your WiFi router and your ATV is too large, or there are corners in between or even a stone wall, you might have a major problem. Even a glass window in-between can be a show stopper.
Anyway, by now, you have a good idea, where to find the cause. Google on the Internet, and you will find a lot of good suggestions for solutions.
And… don’t give up !!