3G ipod suddenly DIES in no frills incident!!

I am a long time mac user, going back to the apple II +. While I have had my ups and downs I have always remained optimistic trough many crashes and drive failures.
Now my 3G ipod, purchased 2 years ago, suddenly died one day a few weeks ago. I had just updated to itunes 5.0.1 and done the recent security update too. These were the symptoms, similar to many I have seen elsewhere in the discussion boards:
1- Ipod is not recognized at all by my, and my partners, mac. Not in disk utility, tech tool pro, or disk warrior. Nothing. It had already been set to disk mode. So unable to do any software restore or erase.
2- Only the apple logo comes up on the screen for about 5 seconds, disappears, then comes back. It does this until it runs the battery out and eventually a battery with exclamation point comes on and disappears.
3- Does not respond to reset, the apple logo does disappear, and it flashes as though it had taken the reset, but the it continues in the loop of 1.
4- 1 is accompanied by a clicking sound (the dreaded drive failure sound).
As it is two years old, it is out of warranty, and even if it was I am in Europe and it was purchased in the states. To "fix" it, meaning to replace the drive, would cost 250 Euro = almost cost of a new ipod.
I can only be suspicious of tech manufacturing versus tech marketing. It seems electronics nowadays are built with a life expectancy of 2-3 years. So that one has no choice but to upgrade to the next latest edition. Yet the marketing and even the design of products such as the ipod, suggest that it is clean, perfect, no screws, no flaws. As though Jobbs had pushed out the perfect silver and white egg. Though without even dropping it once, with very light wear, this egg seemed to take its own life from within.
I am not going to say that all of the music on my ipod was legitimately acquired, though more than 90% of it was. Maybe this is negative ipod karma coming back to get me in this lifetime. This leads me to a further query. Perhaps there is a way to encode mp3, or aac files to cause physical harm to the drive in the ipod. But so far I can not find any confirmation of this.
All I know is that now I have a sleekly designed 300 dollar paper weight.

Thomas - the constant rebooting you refer to is happening because either 1) the iPod software is corrupt or 2) the drive is damaged.
If you check out the iPod troubleshooting basics information you'll find out how to set the iPod into disk mode and how to reset it. If you can reset the iPod and then immediately put it into disk mode you can then use the restore CD to reinstall the software.
When the iPod is constantly rebooting as you describe, doing the reset and then performing the disk mode command immediately afterwards can be a little tricky - getting the timing right so that you perform the disk mode command before it spontaneously reboots but not too early can be 'fun.' And if the drive is damaged, it will be useless. But I've resurrected quite a few iPods that appeared to be dead.

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