Not surprisingly, ATM 2.0.2 (and probably 2.0.3, which I've had for some time) doesn't recognize the new Fonts folder in System 7.1. Fortunately, Adobe has a $7.50 upgrade to a version that supports the Fonts folder; however, if you don't want to wait, here's a way to fix the problem yourself. Jim Burmeister posted this note, originally from Matt Slot, on how to patch ATM 2.0.2 with ResEdit to see the Fonts folder. Of course, the standard warnings about ResEdit corrupting your moral fiber apply.
ResEdit instructions -- Open up the "ATM 68020/030" file. Open the DCOD resources, then open DCOD ID -15005 (the second one). Do an ASCII search for the string "extn" and replace the one instance with "font". That's it!
This tells ATM to look in the Fonts folder instead of the Extensions folder, so you can't leave your fonts in the Extensions folder, or ATM won't find them. Also, be aware that this hacked version of ATM won't work under System 7.0 anymore.
I didn't look in the "ATM 68000" file, but I suspect a similar change could be made for those of you using 68000-based Macs.