iPod Touch 3rd gen reboots: panic CRC ERR

My 14 year old daughter had an iPod Touch 3rd gen that, with less than a month to go on the warranty, the touchscreen stopped working. Took it in to the Apple store, where they tried to see if they could resuscitate it by upgrading iOS, reseting to factory defaults, and a couple other magic clicks they tried. All to no avail. They checked the liquid damage indicator, found no damage, and then agreed to replace the device. I walked out with a new (?) device and was happy.

A couple months later I overheard my daughter asking if she could have her mom's Touch. I asked why she wasn't using her Touch, and she told me that it has rebooted randomly since we got the replacement. Of course, I was incensed that she didn't say something sooner - like, before the warranty ran out. Knowing that the warrany had expired, I started to research the problem on Apple's forums and the Internet.

Most of the information I found seemed to indicate that certain versions of iOS seemed to incite these kinds of problems. So I went through several exercises to try upgrading, downgrading, restoring the device, DFU mode, etc. Still, the problems continued. I upgraded the device over the weeks and months, hoping to find the magic version that would stop this. I tried removing apps, not installing any apps at all, putting music on slowly instead of syncing large amounts of data, etc.

A day or two ago I installed iOS 5. It seemed like it was going to work fine, but still periodically it would crash - including during the upgrade process itself, during the restore after the upgrade, when running large apps, when running small apps, and even when not doing anything at all. In fact the reboots complicated the process such that I could no longer sync without an error, so I had to reinstall the OS again earlier today. I was at dinner tonight and looked over when something caught the corner of my eye - it had gone to the Apple boot screen all by itself, when it was simply sitting there not being used.

I found General -> About -> Diagnostics & Usage -> Diagnostic & Usage Data, and see eight files:

(4) files called 2011-10-15-xxxxxx.panic.plist (I assume xxxxxx is a time of day, since the latest one is from dinnertime)

(4) files called ResetCounter-2011-10-15-xxx (rest of file name is cut off, xxx is first three digits of above xxxxxx)

I opened them and they all look relatively similar (latest one shown):

panic.plist:

Incident Identifier: 5498CD62-1915-4CF6-AA29-68B264862600

CrashReporter Key:

1f8e6350d76b74f0edef75a88dbf683f7cf32490

Hardware Model: iPod3,1

Date/Time: 2011-10-15 20:42:29.359 -0400

OS Version: iPhone OS 5.0 (9A334)

CRC ERR!

ResetCounter:

Incident Identifier: 246DB43B-7BC1-454D-8835-FBB81C4DD63B

CrashReporter Key:

1f8e6350d76b74f0edef75a88dbf683f7cf32490

Reset count: 1

Boot failure count: 0

Boot faults:

Boot stage: 0

Boot app: 0

Now I'm no Apple genius, but CRC ERR to me means a memory problem (cyclic redundancy check, stored checksum of memory contents does not match calculated checksum of same). The fact that there is a file for each crash since I reinstalled iOS indicates to me that this device is panicking because of a memory problem.

I am generally happy with the Apple i* line - our family has an iPad, an iPad 2, an iPhone 3GS, an iPhone 4, 3 iPod 3rd Gens, and our daughter is on track to get an iPhone 4 for her birthday next month. What concerns me is that they have given me a refurbished device with a problem, and I am powerless to do anything about it? The flat rate repair cost for the device is $149, but I feel that they gave me a device that wasn't working to begin with.

Any advice on how to deal with Apple in a case like this? The device is, of course, not covered by warranty, and they want an unspecified amount of money for a single telephone incident, wherein I believe they will simply tell me/confirm that I have a hardware issue. I would like them to look in their records and see what the problem was with the original device they refurbished, because I suspect that they didn't find fault and simply repackaged it.

I am prepared to talk to them - I think I will go to the store, though, because there are scant few appointments available for someone to call me in the next week. I am even prepared to pay the money, if I thought I had a decent chance of getting some satisfaction in this. But after reading some other customers' experiences with AppleCare, I tend to believe that the tier-1 support people won't satisfy.

The device was easily $250 when I first bought it for her, and I feel somewhat cheated if they simply repackaged dead hardware. But it's my word against theirs at this point.

Again, simply looking for advice on how I might bring this to the attention of people who care and aren't just reading from a troubleshooting flowchart.

Thanks in advance for any advice or suggestions, including if anyone knows of a resolution that I haven't tried?