Thanks for your input.

When I flashed the device with the Emma tool it was reset to Android and since the error persisted I conclude it's a hardware issue.

As the error has since disappear I conclude it was a temporary error.
My friend has decide to keep it and sent it in if the error reoccurs.

I might give the CSD tool a try.

I really hate these periodic errors. Such a hassle to debug, yet get repair ed if its gone when the repair store gets the device.