You can hard reset your Motorola Droid phone if you want clear all of the data off of the device and start fresh. There are two ways you can perform a hard reset. One option is hardware based where you use a button combination before the device boots into the Android OS. The other option allows you to use the software menus.
Note: Be sure you have backed up all of your data before performing these steps. Data in the memory of the Droid will be cleared like application data, recent call history and bookmarks. Data on the SD card is preserved unless you choose to format it.
Hardware hard reset method
1. Turn the Droid off. If it won’t turn off, take the battery out then place it back in.
2. Open the keyboard and press the X key while pressing and holding Power. The device will power on. Keep holding the buttons down until a yellow triangle appears on the screen.
3. Press the Camera and Volume Up buttons at the same time to get to the menu. (I had to press them several times to get it to work).
4. Use the direction pad to the right of the keyboard to select the Format option.
Software hard reset method
1. Open the Settings app from Home > Menu or tap the application slider and select the Settings icon.
2. Select Privacy.
3. Choose Factory data reset.
4. Select Reset phone.
The hard reset process will take a few minutes. When it’s complete, you can reboot the Droid and it will be reset to factory default settings, just like it was when you pulled it out of the box. The device is ready to be used again, sold to another user, or placed in storage. Data on the SD card like photos and music will still be present. Be sure to pull the SD card out of the device or format it if you don’t want it to get into the wrong hands.