Support !!Help!! Will not recover or factory reset!

Have had this Inc for about 8 months, it has not been rooted, flashed, or anything else; just factory fresh. After shutting down to exchange a fresh batt and tried to start up it froze on the white "HTC Incredible" screen. Popped out the batt, tried "recovery" (thru volume down + power) but stops on the red trianlge/exclamation. This is also the result when I try factory reset.

When I try +volume/power from that screen I get the system recovery menu, but none of the options there get me anywhere. Tried to wipe data, tried to update from Sd card and even wipe data and factory reset, but I just get messages at the bottom showing E:can't open . . . E:can't mount. . . ect.

I'm mad about loosing data, but I am banging my head against the wall over not having a phone. I was gonna just send it in for replacement, but the guy at Verizon said that my factory warranty would be voided because I have Ghost Armor, so when they pull the phone they will see "tripped moisture sensors" from the install, and will just bill me for a new phone.
Is there any way to re-install the factory software from the SD card, or could I possibly get around this issue by rooting? Never rooted before due to the warranty thing, but from what I have been told I am SOL on warranty coverage so I will try anything.
Any help would be awesome!

 

Tried that, and when it finished I got the message "Main version is older."

 

not sure about Gingerbread. My Inc did a system update (OTA) a few days ago, but that is it. I didn't manually install anything. When I boot in safe mode (tried with and without SD card) I get past the HTC incredible screen, I get the "Quietly brillient", then the red eye, and then it loops back starts over.