Ipod 80g crash/won't hold settings/won't restore

Out of the blue my 80g classic (which I've only had for a couple of months) hung. I reset it. It came back up with the welcome/language screen, all factory settings, but "0 bytes used, 0 bytes available".
Vista sees it, and wants to format it (but then says I don't have permissions).
I load iTunes, and it doesn't come up on the side control panel. After a few minutes iTunes will hang, and then if I unplug the iPod it un-hangs.
Then after I unplug the iPod, sometimes iTunes says there is an iPod on the machine that needs to be restored, yet there isn't, it's not plugged in. Whether I plug the iPod back in or not, the "summary" screen with the restore button appears but then immediately disappears, as soon as I click "ok" on the message that it needs to be restored.
I am unable to restore the iPod through iTunes due to this.
I can get the iPod into the disk mode. Using disk mode doesn't change my ability to have iTunes see the iPod/restore it.
I've rebooted, I've uninstalled and re-installed iTunes.
If I change a setting on the iPod (such as backlight, or the date/time) and I reset it goes back to the welcome/pick language screen as if it was out of the box. And still it says "0 used/0 available".
I've run every single troubleshooting tip on the web site and off the internet that I can find.
Suggestions? Anyone? (There are no service centers/Apple stores anywhere near me to go in to).

So I spent over two hours with tech support (my one free call, so from now on, I'm on my own), and talked two two separate people. It was determined that the iPod cannot access the hard drive, so my brand new (purchased 8/24/08) is going back to Apple. I'll likely end up with a refurbished one. I'm told that it isn't like "most refurbishes" and it won't be "someone else's used iPod". I'm not convinced, and it just isn't fair. There's no reason for it to fail all of a sudden. I have it in a hard shell case, and I've never dropped it. So that is basically $250.00 for something new, down the drain. I might as well have gotten a used one off eBay for $50.00. *shakes head*

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