Ipod frozen one month after warranty expired!

I REALLY REALLY hope somoeone can help! I have the 40GB ipod that I got as a 2004 Christmas gift. I only use it when I go to the gym, so it hasn't been jostled around from frequent use. It has a protective case and resides in it's own compartment in my gym bag. Needless to say, it has ALWAYS been very protected.
I pulled out my ipod to take it on vacation in January this year. I get on the plane, pull out my ipod and it's frozen. I've been trying these 5R's, but the best I get after several updates and resets is the language screen and this only happens when I move the hold switch from on to off. From there, nothing happens.
Could it be a mere coincidence the timing of such an issue? Has anyone else had this happen and how on earth does apple get away with this?!

I tried that a dozen times but buttons seem to be locked -
Dead iPod Nano after Upgrade to iTunes 7.1.1.5.
Immediately after upgrading to iTunes 7.1.1.5. and updating, charging, and syncing, my iPod does not function properly.
Symptoms:
_The click wheel does not seem to work any more. The hold switch is set correctly to the left position.
_No response to a reset by holding menu / select buttons for 10 secs.
_When iPod is plugged into my CPU it seems to act normally - the screen lights up briefly and displays the message "do not connect" as iTunes starts and syncs all checked songs like normal.
_After the sync the iPod display a full battery icon.
_When the iPod is unplugged from the CPU the iPod display is lit briefly, displays the menu where the user selects which language to use. There is a small icon that looks like a lock at the top of the screen. After about 15 secs the screen goes blank despite trying to scroll and make selections with the click wheel.
_The iPod does not respond to the click wheel when in Itunes (which may be normal) or when disconnected (even after switching the hold switch back and forth several times).
_The iPod shows up in iTunes and in My Computer.
_Songs on iPod open in Windows Media Player and play OK when selected directly from My Computer.
I tried resetting and upgrading the iPod several times from Itunes and also restoring ITunes 5 but no luck.
This iPod (2g) is 15 mos. old and worked perfectly just prior to the upgrade to 7.1.1.5..
Help!
sbyberg
Serial Number: 6U5483TWSZB

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