FWIW, here is a copy of the tech support they sent me about this issue…
Thanks again for contacting SanDisk Technical Support.
To fix the issue you are having with your player, you will need to apply a firmware update while the player is in recovery mode.
To enter recovery mode:
Disconnect and turn the player off.
Turn the hold switch on top of the player on, so the orange is showing.
While holding the record button down, plug the Sansa into the computer, and coontinue holding the record button for 5 seconds.
You will then see a message displayed on the Sansa about entering USB recovery mode. If not, repeat steps 1-3.
Once the player is in recovery mode, please download and run the firmware utility, located at the following link:
Follow the utility’s on-screen instructions. When it asks you if you want to format the Sansa, choose no.
After you are finished updating the firmware, disconnect the Sansa. Watch the screen of the Sansa and when it says “Keys locked, system shutdown” turn the hold switch off, and power the Sansa on.
If you still get the same error, place the Sansa into recovery mode and run the firmware utility again, only this time when it asks you if you want to format the Sansa, choose yes. This will erase everything that is on the Sansa.
The reason why the Micro SD card is not working is because the Sansa only supports up to 2GB cards. We will be releasing a firmware update soon that will provide Micro SDHC support.
If you should have further questions or concerns, please don’t hesitate to reply to this e-mail or contact our Technical Support department at 866-SANDISK (866-726-3475). Have a great day and thank you for choosing SanDisk.
SanDisk Technical Support
PS: If applicable, please take a moment to update your Ebox account with product as well as personal information (no P.O.BOX). Please include place and date of purchase of the product.