One stopped working for about a month after a run in the misty rain, but I was able to get it going again today. I ran today and listened to it. When the battery ran down today it went back to sleep again.
The toggle switch on top is not locking out the functions but when it does come on now while charging I can't get it to do anything and the pad lock icon is showing in the top left corner.
I have a second one I bought about two weeks ago. It is doing the same thing, although it hasn't worked since a long run Sunday after the battery ran down. I was able to connect to the computer and restore it (I did this a few times), yet it still won't play.
I got my nano wet over the weekend and it started acting funny -- the control wheel wouldn't work. Once it dried out it started behaving again.
It sounds like you have two different problems. I assume that you've done a hard reset since you say that you restored the iPod.
With respect to the older one, it sounds like the battery might be on its last legs. I have a gen 1 nano that started acting "stupid" before the battery gave up the ghost. If I charge it for crazy long periods of time it will work for about 45 minutes.
With respect to the newer one, turn it in on warranty and get a new one. My experience with nanos is that once glitchy, always glitchy.
I have the same problem and I think it's totally fried now. I have 2 but once I started doing Halfs and Marathons both had major issues with rain, sweat, lawn sprinkler and me poured water on my head. All major problems it seems. I wonder what the best thing to use is if nano's can;t handle marathons and rain