IPod Mini Issues

Hello, everyone.
For the past month now, my iPod has been going through major issues, and i'm running out of ideas.
It doesn't appear to be a battery issue, because my iPod is responsive, however, the minute I turn it on, a sad folder icon appears, and it lists the apple support website. I was urged to restore it, but my computer freezes when I plug in the 'pod.
After a few weeks of hunting for a cure, i've found no solution. I've tried booting it in Disk mode, and ran a few tests in Diagnostics. My HDScan failed.
Is there anything I can do? Or am I SOL?
I'd send it in for service, but i'm a month out of warranty. Would it be more worthwhile to purchase a new mp3? I love my mini to death, but i've been told that out-of-warranty repairs will cost me more than a new player.
Let me know what you think. If you have any ideas whatsoever, please let me know.
I'm getting pretty desperate (A CD walkman can only get you so far, nowadays)
Thanks alot!
-Sara
(I'm running on Windows XP, with the 2006-03-26 updater, and iTunes 6.0)
  Windows XP  
  Windows XP  

Welcome to Apple Discussions!
Sorry to hear about your problems!
Here's some trouble shooting FAQ's http://docs.info.apple.com/article.html?artnum=32222
Give that a try, or you can request service from that page as well.

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