Are you in the USA? The latest firmware for a Story HD wifi in the US is 1.25. It uploads automatically through wifi after a prompt. It went very smoothly on mine.
Not sure if this recoverable (loading wrong firmware) by user. I'd contact iriver or wait and see if someone else has a suggestion. Read through the posts, I'm sure this has happened to someone else.
If you are not in the US than I am at a loss.