I lost the ability to mount my Kindle after the 1.0.4 update, as well. When I called amazon, they had me do a firmware reset which solved my problem. I had expected the reset to undo the update, but after the reset, I was still at 1.0.4 - I've been running fine for the last week.
Is it kosher to post the instructions on the firmware reset? I think I know the other forum Kingston was talking about, and I don't want to break any rules.