Were you able to download the firmware at all? One last thing to try would be to try reloading the firmware again, but this time check the format box. This would wipe the drive before loading the new player application. If there was a drive head crash, this might help. Unknown, though. Worth a shot at this point.

Edit: One last trick to try. As part of the upgrade, the upgrade package tries to read the drive. Formatting the drive skips that save step and just wipes it all...