I can't restore my ipod after trip to factory

Half a year ago my 80GB Ipod classic quit working. I had just bought it for Christmas 2008. I was stuck on the main menu and the select button would not work. I could use the wheel to move up and down the menu, but I couldn't select anything.
I mailed the ipod to Apple and they returned it saying that I had dropped the device and that that had caused the damage. They wouldn't fix it. With a year until my store warrant went into effect, I wanted to try and fix it myself.
I plugged the newly returned ipod into my laptop (Windows Vista, Toshiba). A screen said "Restore with Itunes." When I plugged it in, instead of the typical 'sync' page, a very basic, technical looking white screen appears. All it says is Do not Disconnect, with a battery symbol in the top right corner and the flashing 'no smoking' thing.
If I plug in the ipod and then try to open itunes, itunes won't open. It freezes. If I have itunes open and then plug it in, itunes freezes again.
I unplugged the device, and turned it off "Held Menu and Select." I've put it in disk mode. I've done the "Prev+Select" reset mode, but nothing resets my ipod. When i'm not fooling with it, I only get the "Apple" logo screen. I can't return to the Ipod menu that I saw before I sent in my device.
I think the factory erased my ipod software, and i can't restore it.
Any help?

From what iPod's conclusion was and from your symptons after iPod's repair attempt, it sounds like it was dropped and the hard drive is damaged. The hard drive would likely cause iTunes to freeze because part of the iPod still is working but the hard drive is not and it's causing iTunes to not know what to do. Same reason why it won't reset. You can bring it to Best Buy for a COD estimate + repair. I believe it's $34.95 non-refundable deposit to send it to a Best Buy Service Center. If you approve the estimate, the $34.95 would be applied to that total. If you deny the estimate, the $34.95 would be kept by Best Buy to cover shipping and diagnostic charges.
The hard drive and labor probably wouldn't be that bad. Since the warranty is VOID, you might consider purchasing an iPod hard drive off the internet (Use Google and your specific iPod model) and then research how to replace it if you prefer not having us repair it for you.
Hope this helped.
Agent JC | Counter Intelligence Agent | Viewpoint Committee Member | Layaway Development Team
Geek Squad® Precinct, Best Buy® #404 | Southfield, Michigan, USA
"Satisfaction does not come with achievement, but with effort. Full effort is full victory." - Mahatma Gandhi
Did you know Best Buy® is starting to offer Layaway in select locations?
Ask your local Best Buy's Leadership Team if they are participating!
DISCLAIMER: Although I am a Geek Squad® Agent, any post(s) I make on these forums are NOT to be viewed as an official Best Buy® answer or reference.

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