4th Gen iPod Nano (8GB) is LOCKED.

My daughter's iPod Nano 8 GB (4th Gen) continuously shows the LOCK icon (a Green colored LOCK symbol) on the screen. We have forgotten the password as well (if it was ever set in the first place). While connected to Laptop, only the Connecter symbol is constantly visible with a message below stating - Connected. Eject before disconnecting.
I have tried to reset the iPod as follows....

• 1. Toggle the Hold switch on and off. (Slide it to Hold, then turn it off again.)
• 2. Press and hold the Menu and Center (Select) buttons simultaneously until the Apple logo appears, about 6 to 10 seconds.

Immediately after that the Green LOCK symbol reappears and a second later I am back to square one with the Connector Symbol and message screen appearing.

Please help!!!!!