From scanning other Internet posts, it seems that this is one of those "known issues" that basically adds up to "you're screwed, open your wallet." It seems many people have had this problem with Sony recorders, and it appears to be a manufacturers' defect that crops up with some players after a bit of wear (not that Sony will be admitting that anytime soon).
Mine is an N707 which I've had for about 15 months. The first time it happened it was just music that I'd uploaded via NetMD. This time it was a crucial interview I'd recorded with some essential quotes for a story I was working on. I'm still stressing and hoping I can somehow recover the data, but I'm not hopeful. Thanks Sony.
Unfortunately, I probably voided my extended warranty by hacking my player so I could control playback speed. None of the other posts I've seen on the subject were from hackers, so that's not the problem. It would make more sense that it happened from dropping it, but I haven't done that in months, and the problem just started a few days ago.
If anyone has actually had theirs repaired and can tell us what the problem is, I'm sure we'd appreciate knowing.
the kid