I am not certain what is wrong with it.

From your description, it played fine in the car, but you cannot get the player to respond when in AC mode. The player appears to boot fine in AC, but after the boot you cannot get to shell or get the buttons / remote to respond.

When you reflash or upgrade the kernel, this should in no way touch the music partitions. When you said you had to reload your music, was your music gone??? If so, that implies something is wrong with the disk or that there are some other problems.

Can you reload the Mark1 developer image, and let me kjnow if that helps? Do not load hijack yet, just the image. This should not change your music or playlists...