IPod continuously restores and updates to no effect

I have my girlfriend's grey-display 4GB iPod mini.
Here's the problem. When starting up the iPod goes to the exclamation folder icon (http://docs.info.apple.com/article.html?artnum=61003). It then shuts off. Following the instructions I plug it in and make sure it's charged. Windows recognizes a USB device just as iTunes recognizes the iPod. Per instruction I restore it using the latest iTunes (7.0.2.16). It gives me the instruction to not touch the iPod while it restarts. I don't. upon rebooting, windows once again recognizes a USB device, and iTunes informs me (once again) that the iPod is in recovery mode and must be restored. I repeat the process once more. Same results. Then, I begin following the steps concurrently with the Restore option; reinstalling iTunes, changing the iPod's letter/path (from G: to Q:), resetting the iPod with the Hold button and putting it in disk mode. I've followed the five R's in exhaustive measure, every concurrent link from their onward has garnered nothing. I've dug thru these forums 12 pages back to no avail; picking and screening possible headers for a problem similar to my own.
I only require two things from you fine people now. First, I'd like a suggestion for my next possible step I could try that is uncatalogued by the Support pages here at apple.com
Secondly, barring this next step, is there any way I could get an estimate on repair or replacement if I were to send it back to apple?
PS: Windows has recently been opening the iPod like a storage device.
Thanks for all the support.
dell 8600 Windows XP SP2
dell 8600   Windows XP   SP2

I do not suggest that you send your iPod to apple for service, as the repairing cost is very high e.g. 60-70% cost of a new iPod Nano with same capacity
Bear in mind the battery of your iPod may also reach the time for replacement
I suggest 2 things:-
First find another PC (even better a Mac with firewire), do a Restore for your iPod there
If does not works then to find a second repairing company, you can try iPodResQ at your own risk
http://www.ipodresq.com/index.php

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