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I grew tired of Googling each time I needed the correct button sequence to put iPods into their various modes, so I’ve put together this little interactive display. Click on one of the three darkened buttons above to display the key presses necessary to put the iPod in the selected mode. To use, Reset the iPod using the first combination, then use the Diagnostic Mode or Disk Mode combination as soon as the Apple logo appears.
From the top:
Normal
Hard Reset
Diagnostic Mode
Disk Mode
My iPod got stuck in disk mode and my forums reccomended sending it back. I held i up to my ear listened for disk activity and when I tried diagnostic mode I heard the disk nothing happened, so I did a hard reset again held down for 10 seconds and it came to life
The problem can be experienced after it is dropped, it seems, which may have been what happened to mine, as this has been reported here (iLounge), and here (Macrumors Forums). The fixes on this page should solve the porblem
You can also, if all else fails, do a factory reset
The screen displays "disk mode" at the top and is in grayscale. There is also a battery indicator at the top-right and it says "safe to disconnect" in the middle of the screen.
The solution is actually quite simple. If the normal reset doesn’t work (slide hold on then off, hold the centre button and menu button at the same time for five to ten seconds), you will need to download the iPod Updater to perform a factory reset. You can get this here:
http://www.apple.com/ipod/download/
Once the tool has been downloaded and installed, plug your iPod into the computer with the docking cable. Make sure all instances of iTunes are closed then open the updater tool.
This next step will wipe all your music and iPod settings. If your music is not backed up on your computer, you will lose it! I am not responsible for any losses the following step may cause.
Hit the restore button and the tool will wipe your iPod and revert it to the default factory settings. Now just put your music back on using iTunes and it should be as good as new. Hope this quick guide was useful to someone out there.