Do a quick search on "Drive-cable." This has happened to a lot of people (including me) and it is most likely a bad drive cable. The empeg team is aware of it (or more accurately became aware of it once all the players were sold in a few weeks and this started popping up.)
It is a simple fix if you are familiar with opening up a home computer. But don't do anything until you contact support. Opening the player without permission from support will void your warranty. Just send them a note with all of your info (and Serial Number). You will get a personal email back from them, usually in the same day.
NOTE: Remember that the drive cable is hot-glued to the hard drive. The glue has to be removed before you can pull the cable.
There is also a temporary fix.... Basically, what has happened is that the drive cable has three connectors on it - one for each drive (60gb players have two drives) and one to connect to the player's circuit board. There is a connector at each end of the cable, and the third one is in the middle. One of the "end ones" connects to the circuit board. The "middle one" connects to the first drive. It is this "middle" connector (crimped on) that is causing the problems. To fix this, I simply used the connector that is originally intended for the 2nd hard drive to connect to my first drive. (I also moved the hard disk over so the cable would reach).
Again, don't attempt any of this without support's consent. I had opened my player many times to install or swap drives, so I was comfortable. You may want to check out Tony's drive upgrade tutorial at RioOrg.com to familiarize yourself with the inside of the player.
You could always send your player into support too. They are independant within SonicBlue and really do a great job.
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Brad B.