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Are you doing a Restore to Factory Defaults, or just a Reboot? I'd recommend the first if that's not already what you mean by "hard reset." After it works for a while, are (were) you immediately putting a bunch of books back on it? Are they still on it? It could be a bad book that's freaking the indexing process out.
Charge overnight, Restore to Factory Settings and put one book on it and see if it behaves. If it does... add more books a few at a time (and allowing time for the indexing to complete before adding more) until you have all the books you want on it, or you discover the book(s) that it doesn't like.
I've had some bad MOBIs lock my Kindle up before.
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