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After the hard reset do you get the Erase All screen? If not, then you might not be doing the hard reset properly.
If all else fails, you can reset the device and then immediately connect it to your PC. It should show up as a USB device. Then, reformat the device using FAT. I've had to do that once when my database folder became corrupt. After that, it should start up normally.
Edit: sorry for the duplicate advise. It appears that porkupan and I were typing at the same time!
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