This sounds like a weird one, certainly.
I think the sooner you can try a different USB cable (seems unlikely, but, yeah, good to rule it out) and a friend's computer .. and if you have a geek friend .. now's the time to call in that favour too
I'm not really a Windows person, but will say that Win7 is usually pretty sane with how it detects hardware, and the PB models have the benefit of presenting as plain vanilla USB storage units, which I've found 'just works' on Win7 as well as GNU/Linux.
Because you have the PLUS model, if you have a wifi network at home you can also use that to transfer books I believe. It may be an alternative workaround, as the anticipated workaround of transferring files via the microSD card fell through.
When you say the reader works fine for MP3's .. you mean for a different microSD card that you have, and use in a personal media player? A microSD card is a microSD card (he says with a little wariness) - all these things should be formatted to the ubiquitous VFAT file system - or to put it plainly, they should all 'just work' on every Microsoft operating system (and Apple OSX and GNU/Linux system) out there.
On the wild off-chance, could you remove the microSD card from your PB360, then power the PB360 on, and then plug it into the USB port on your Windows box? It's conceivable, but whacky if it's the case, that the microSD card is borked and is confusing things at the Windows end. (Whacky .. because it doesn't make much sense, but just conceivable because the PB presents two virtual disks to the operating system - its built-in 1.5GB memory, and the microSD card, as separate devices.) Worth a try anyway, as it's a very quick thing to test.
Reset .. cool, just wanted to make sure. As I say, it doesn't sound like this is something you need to do. I recall there's a *extra strong* reset option, something about holding down power and hitting that clicky button next to the battery, just for the record. I've had to do it once, and it required three hands and one nose. But, yeah, even the RESET hole by itself is overkill with this particular problem I think.