A factory data reset can resolve recurring system problems by erasing all your settings, apps and data. Keeping the default settings during a factory reset preserves data on your SD card, but you can also elect to simultaneously erase the card. This procedure relies on the Settings menu, which might be a problem if the phone is unresponsive or cannot boot. If that's the case, you'll need to use the external method to reset the phone.
Using the Settings Menu
Tap the "Menu" key and select "Settings."
Select "Settings," "Privacy" and then "Factory Data Reset." Keep the "Erase SD Card" option unchecked unless you also want to erase the storage card.
Tap "Reset Phone" and then "Erase Everything." The reset could take several minutes to complete before it restarts your phone.
Using the External Method
Power off the phone and unplug any power or USB cables. If the phone is unresponsive, remove the battery, wait a few seconds and replace the battery.
Hold down the "Volume Up" and "Volume Down" buttons and press the "Power" button. Keep all three button depressed until the Motorola logo appears and then release them.
Press the "Home" button when the Android logo appears.
Press the "Volume Down" button to highlight "Wipe Data/Factory Reset," and press the "Power" button to select it.
Select "Yes -- Delete All User Data" to perform the factory reset, which can take several minutes to complete.
Select "Reboot System Now" when the reset completes.
- All data on your phone is erased during the reset. Be sure to back up any important data before resetting the Motorola Defy XT.