Hey,
This way of soft reset helped, but for a little while....tried this and it worked really great. But you need to open your handset.
What I did was, opened the back cover, disconnected the ribbon terminal of volume controls and reinserted.. Also checked the main control touch buttons(Back, Windows key and search key) module and reinserted. After reboot, hard reset the handset using vol down key after power vibration.... After every thing is complete...my handset worked like charm. During this process, found the actual problem which I feel would be, is that the hardware for back touch button is interfering with the volume down key. Since, when ever I used to press the volume down key hard, the back button used to get activated.
Hope the above process helps....May be a little risky for those who don't want to fiddle with hardware....but Since i have some experience of "How to" i tried....
Any ways good luck....