You don't really want to do a factory reset... that's what got you into that mess in the first place. It's a latent bug on the version of Debian they used on some of the plugs. Instead, just learn how to unbrick your plug. I went through the exact same thing.
Here are my instructions http://shankserver.org/2010/09/unbrick-sheevaplug/
It boils down to getting a very reliable USB thumb drive--usually an old 512MB one.
Use the EISA tool from Sourceforge, and not the official installer, which has lots of issues.
Become a master of connecting to your SheevaPlug using the provided mini-USB-looking serial cable, and interrupting start-up to get to the Marvell>> prompt.