In a contant state of reset, will not play or power off?
I have the 40 gig iPod 3rd Generation with the 4 buttons and wheel. I have had this ipod for several years. Three weeks ago it started powering off and immediately rebooting itself, showing the dreaded exclamation folder, then the Apple icon, and would power back up.
If you can get your computer to recognize the drive, I would try to erase and reformat the hard drive using disk utility (in the "Utilities" folder under "Applications"). From there maybe you can get iTunes to recognize it and then you can do a restore.