Have you tried the reformat commands, or the wipe command
Clear Content (Format from Device) – Clears all media content from the device, but leaves the firmware intact.
V1 Devices (Zune 30): Press and hold Back + Right + OK
V2 Devices (Zune 4/8 and 80): Press and hold Back + Play/Pause
Initialize Disk – Removes the content and the firmware. Device will be inoperable until connected to a PC so new firmware can be installed.
V1 Devices (Zune 30): Press and hold Back + Left + OK
V2 Devices (Zune 4/8 and 80): Press and hold Back + OK + Play/Pause
It could be the firmware is corrupt
How to Reboot, Reformat, and Restore your Zune device | Zune.net - Thread