There's three folders on the root level of the Story's SSD. You have to create the exact same folders on the root level of the SD card using a card reader, or you'll end up in that loop. I don't remember if hard- ejecting the card will get you out; I think it does.
Irony is, if you use Calibre to upload books to the SD card, it won't even use those folders. You just have to have them for some reason or it'll freak out. It also doesn't like having stuff not uploaded thru something like Calibre on the SD; I tried using it as a place to back up my writing, and the end result was another loop. So now I have a 4-gig sea turtle on my keychain, and the SD card is a permanent resident of my iRiver since my digital camera uses CompactFlash.