The iPod "iPod" could not be restored because it is busy

My 20g ipod started giving me trouble a few weeks ago after I loaded some post-Christmas purchases. It wouldn't load the last few songs, and it was half-empty, so capacity wasn't an issue.
I next tried to restore the iPod, but my mac mini then seized up, and the restart hung, so I had to do a hard restart.
Upon restart, the iPod was obviously now corrupted, with only a half-completed restore, so I tried again.
This time, and every time since, I get the following error message: The iPod "iPod" could not be restored because it is busy
So, I next followed the 5 R's, to no avail.
Disk Utility gives me the error Disk Erase failed Disk Erase failed with the error: Input/Output error
I also tried security erase, and while it starts with the overwrite, it eventually kicks out of the process with another I/O error.
Today, I downloaded iTunes 7.6 with the hope that it would fix this issue, as it has been surfacing in discussions pretty commonly. I thought this was reasonable, because of some difficulties with iTunes after the release of the iPhone were solved upon the next release of iTunes.
Unfortunately, I am facing the exact same situation.
There is one additional step I was able to take by trial and error, and one further step I am considering.
When I originally searched this topic, I came upon a "diagnostic mode" fix that's supposed to be accessed only by the iPod nano.
Using this mode, I was able to run several tests, and ram checks out, and one of the two disk tests come back fine.
Since I don't know what the alphabet test results mean, this was about all I was able to gather.
I attemmpted to use the diagnostic mode reset, but the problem continued.
My final thought, aside from waiting for a further iTunes update, was to dig out a third-party disk utility I have here somewhere and see if that will erase the iPod.
Any suggestions out there?

I was able to solve this by (warning, this will void your warranty) taking the iPod apart, very carefully. Being careful not to separate the cables inside, place a folded business card on the hard disk, and place the metal half back on.
Do a Google search if you don't believe me.
Oh, and for the gent from Apple that removed the post containing URL with pictures of this fix, I do NOT receive any cash, complensation, self esteem or other recompense or good feeling from posting this fix, or directing people to search for it.

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