Unfortunately you will have to perform a factory reset of the device. As I mentioned, there was a chance it would not be a serious issue and that the fix woul be simple, but the fact that didnt work means the error is actually at a system level and the only reoslution will be to reset it, but its not as bad as it seems.
As long as you have a Google account synced to your device, your contacts, calendar, etc. will be re-synced to the device after you run the initial setup again as long as you sign in with the same Google/Gmail account. Any apps you have paid for, you can get back after you reset the device by opening the Market, pressing Menu on the phone and choosing "My Apps".
I recommend you go to http://google.com/contacts on your computer(with the same google account thats on the phone) then check all your contact groups to make sure the contacts are synced(if not, ask me about contact backup instructions).
As far as any data that is stored on the SD Card(images, music, etc.), it will not be erased. Only the phones internal memory is formatted.
To complete a Factory Reset follow these directions:
- Remove the battery.
- Replace the battery but do not power the device on.
- Hold down the Volume Down button then press the Power button. Hold the Power button for 2 seconds and release it without releasing the Volume Down button.
- Your phone will boot into fastboot/hboot mode.
- Follow the instructions on screen to navigate through the options.
- Choose Clear Storage (sometimes named 'Wipe Data / Factory Reset')
- Confirm your choice and wait for the device to do the rest of the work.
- When the device reboots, follow the on screen instructions to setup your new device.
If you have any further questions or this solution does not resolve the issue, please feel free to let me know...
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