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Soft reset is equivalent to a "reboot" on a PC. No data is lost, but the RAM is cleared up, which may solve various temporary issues. To soft-reset an iPAQ, find the soft reset hole, and stick your stylus in it briefly.
Hard reset is equivalent to "reformatting" a PC. All data is lost, and the only programs that remain on the device are the ones that come in ROM. Hard reset instructions vary on the type of iPAQ you have, so you have to tell us that first.
--janak
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