This should reset it:
1. The device must be powered OFF to perform this reset. If the device is on, turn it off.
" Note: If the device is not responsive and does not turn off, remove the battery and re-insert it.
2. Press and hold the Home button (picture of a house on it) and the Power button (the red hang-up button) at the same time.
3. Keep holding Home and Power together for at least 25 seconds, even if the "Startup" screen appears.
4. Release the keys when you see a black screen with a warning sign.
5. At the above warning sign screen, press the Home and Power buttons again simultaineously, and then let them go.
6. Use the trackball to scroll to wipe data/factory reset.
7. Press the trackball in on wipe data/factory reset.
8. When the bottom of the screen displays "Data wipe complete", roll the trackball to reboot system now.
9. Press the trackball in on reboot system now.
" Note: You can also remove the battery and re-insert it.
Here is guide with pictures I posted before:
http://forums.t-mobile.com/t5/myTouch-3G/reset-a-my-touch-3g-tmobile/m-p/248550/highlight/true;jsessionid=E090B0F73D48F9D744267088A71095D5#M39143