Reboot loop after factory rest - problem

I have an ipod 2G 8GB running 4.1 jailbroken by jailbreakme.com
it was running fine, until today morning i decided to >settings>general>'reset all setting and erase all content'

it showed the entire deletion on the bar

afterwards when it should have rebooted it got stuck on the apple logo while that loading circle hung up... after a small time interval it restarted by itself and the above thing goes on and on and on

it does not turn off - until i drain the battery after which if i attempt to put it in DFU it starts looping again, i cannot do a restore as my computer or itunes(which i reinstalled) cannot recognize it.
I pressed Power+Menu to restart it - doesn't work.
After the battery drained and it got switched off i kept the home pressed and connected it to the dock while itunes was running - nothing, the loop starts again.
The hard disk isnt gone i think as the battery drained icon (empty battery) shows when i press anything when its absolutely drained.
Please Help me.

 

Problem solved

Here's what happened

the battery was completely drained. i pressed the power and menu button then let the power button go in about 10-12 seconds, i get a screen about to light up. while all this was happening my ipod was connected to the pc (itunes wasnt recognising it). i got the usual apple logo , loading stuck in between. however i DID NOT let go of the menu button and after about 2-3 min i got the itunes logo. i will have to restore but its great, atleast its working again.