I've seen others with similar problems explain that they got past the "firmware update wasn't completed" message by either pressing the reset button in the hole about 10+ times in a row while it was starting up, or by holding the reset button down for 10+ seconds and then pressing the enter button. After that, it could be detected by the desktop when the reader was plugged in via USB. You may still have to get the latest firmware upgrade from Sony and install it from your desktop if the reader is actually corrupted.
There appears to be a test mode that you can get into by putting software on an SD card, however, I wouldn't be surprized if the system has to be already booting properly for the tests to work. Anyway, if you're interested, it's described in the 505 Service manual. Search for SKU8473.pdf online to get a copy of the manual.
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