Not sure what happened but you need to do a factory reset on it.
1) Turn it off or pull the battery and put it back in
2) Hold down your vol-down button then power on keeping the vol-down button held untill you see "fastboot"
3) press the vol-down button and scroll till you get "Android Recovery"
4) press the vol up button, your phone will say "entering recovery mode". Then your phone will show the Android logo with a Triangle and exclamation mark. At this point press and hold the vol up and down button simultaneously.
5) If you have successfully done this you will get to the Android System Recovery menu with some options (reboot system now, apply update from sdcard, wipe data/factory reset, wipe cache partition). If you don't get it right or pressed the wrong option just pull the battery and repeat the process.
You want to scroll down and choose wipe data/factory reset. To confirm your entry press the power button and follow the process of resetting your phone.
Here's a youtube video that shows how the screens should look as you are doing this process:
http://youtu.be/TWiiTBtTh7M
Warning: Doing this will wipe all your contacts/apps, etc. and set the phone back to it's factory settings. If you have backed up your contactcs/email on your Google account you will be able to restore this. But from reading what you've posted I'm unsure of other options besides a factory reset.
