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Did you format the drive from W7... it's probably made it NTFS which is bad... what you actually had was a 505 with another OS installed as well, you should have selected either Sony or eApp and it would have worked perfectly... not much help now I know...
Did you try charging for a few hours with an external PSU (barrel connector) as it's also possible that it's got a flat battery... it doesn't use power to display something on an eInk screen and sometimes you end up with a screen like yours simply because that was the last thing displayed when battery went flat... it then looks like it's doing something when it's actually waiting for power
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