Stuck in Diagnostic Mode boot cycle - always starts in Diagnostic mode

[xluke]

Hello,
My iPod mysteriously started booting into the Diagnostic mode. Many repeated attempts of MENU-SELECT (restart), MENU-REV (Diag mode), MENU-Play (disk mode) or MENU-FWD (force boot from apple bootloader, I think) have occasionally granted me access to my ipod. When I got access, I first tried updating to 1.2.1, when the iPod rebooted, it booted into Diag mode. Then, 20 minutes later, I got it to boot up again (1st restarted, then entered Diag mode "intentionally," then press and held MENU-FWD) and I did a full restore. It still booted into Diag mode on reboot.

What can be done, if anything?

[xluke]

update:
I can now with regularity boot into normal mode by pressing center and forward immediately upon turning on the ipod. However, everytime I boot up my settings are erased (I need to choose language) but data is intact. I have not yet let the ipod do a full power down on its own, I'm still resetting it by center and menu.

What does the command "center and forward" tell the ipod?

Could installing a third party boot loader solve this problem, or is the diagnostic mode called before the boot loader?

Thanks!