Hi there and welcome
First, is the phone still functional? Can you get to settings on it?
ok, to reset you go to Settings, Backup and Reset, Factory Data Reset which wipes the phone and returns it to new.
What happens when you do this?
If it hangs on the screen, how then are you able to get to settings? As I asked if you could and you said yes.
Then it starts normally?
If so, try to reset this way
Remove battery, put it back in
Hold Volume UP and Power for about 15 sec. until Andorid recovery menu comes up.
select using volume down, Factory Reset and power to select it.
Does it then reset this way?
it ignored it and the phone started?
It is the internal memory that has faulted.
I am really sorry about this and you are going to have to return the phone to have this replaced. It is not able to read the segment where the imaged is stored so it cannot do the reset. It will be covered by the warranty if this has not expired, and the replacement will be done at no cost to you.
I am really sorry about this, and if you have problems, or would like any additional information or assistance, please do not hesitate to let me know.
And if you can take a second to rate my service by clicking one of the stars at the top of the page, then submit, that would be greatly appreciated.