iPod Help w/ fixing friend's iPod? (exclamation folder)

So, a not especially tech-savvy friend of mine dropped his fifth-gen 30gb iPod the other day. Whenever he turns it on, he gets the exclamation point folder. I told him I'd try to fix it for him.

I know that when you get this icon, the proper way to fix it is to charge it up, reset it, and restore. Nothing happened when I plugged it into my wall charger, but when I plugged it into my eMac I got the battery charging icon on the screen. So far, so good. I let it sit overnight.

In the morning, when I checked it, it was all charged up and asked me if I wanted to sync it with my library. I said yes, just to see what would happen. It synched normally, but when I tried to turn the iPod on, I still got the pesky folder icon. So I opened iPod updatater to restore it, and it gave me an error message saying it couldn't restore the iPod because there was a file open on it. I can't figure out what to do now because whenever I try to do anything with the iPod itself, it just gives me the folder icon and shuts itself off. What can I do?

Yeah, when he told me he dropped it I figured he probably messed up the hard drive. I thought I'd give it the ol' college try anyway.

Oh, one more thing: His iPod is Windows-formatted. I don't think this is the problem, though, because when I open Updater, the update box is grayed-out for this reason, but the restore button works. Also, I don't recall having any problems reformatting my iPod when I switched from PC to Mac.

OK, I tried reformatting it a few more times, and it worked. But now whenever I open it in iTunes, it tells me that iTunes has detected an iPod in recovery mode, and I need to restore it to use it with iTunes. So I restore it again, and I get the same message.