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Just got my droid and...

Factory Reset option 2 - Warning this will reset device back to original factory settings.

  1. Turn off the phone
  2. Press Power key + "x" (on the hardware keyboard) to power on the phone and bring up the recovery screen
  3. Press and hold Volume Up + Camera Key until recovery menu appears, release keys when it appears
  4. Using the Volume keys, select "Wipe data factory Reset",
  5. Press the center of 5-way navigation pad
  6. Using the Volume keys, select Yes -- delete all user data
  7. Press the center of 5-way navigation pad
  8. Using the Volume keys select Reboot system now
  9. Press the center of 5-way navigation pad
 
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