I know this sounds stupid, but the hold buttons not on is it? Did your friend take it out of his pc or mac withou properly disconecting it on itunes?
That may cause some problems
see here -
http://docs.info.apple.com/article.html?artnum=60942
for some good things to try, it may need resetiung the site tells you how to, plus it also says you may need to wait for the battery to drain before its reset!
Personally i havent had any major problems with my ipod mini except getting itunes to find my ipod mini, but i just reset my ipod and all was good!