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Yes, if you enter passwords ten times, it will run a master reset on it, clearing all data. On the 8th bad password, you will have to enter the word 'blackberry' too, but that is to keep small children from running a master reset by playing with it.
As to the users with jvm errors, you will need to install Blackberry Desktop Manager on your PC, and reinstall the BB software. Both the BBDM and the software can be found at www.att.com/bbdownloads.