Late to the party but I was actually messing around with my old GT540 yesterday, trying to see how it holds up. Honestly, for a device with a 600MHz ARM11 CPU and just 256MB of RAM, it still boots up pretty fast and works well for basic testing. No complaints here. To add to the point above: are you trying to do a factory reset because youre locked out of the OS, or is it bootlooping on the LG logo? Also, did you ever upgrade its software to Android 2.1 Eclair, or is it still running the original 1.6 Donut firmware? The recovery partitions behave a bit differently depending on the firmware version, so knowing that would help...

To hard reset your LG Optimus GT540, follow these steps:

1. Backup Your Data: Before proceeding, ensure you back up any important data, as a hard reset will erase all user data, including pictures and music.

2. Turn Off the Phone: Power off your device completely.

3. Press and Hold Keys: Simultaneously press and hold the Volume Down Key and the Power/Lock Key located on the back of the phone.

4. Release Power Key: When the LG logo appears, release the Power/Lock Key but immediately press and hold it again.

5. Factory Reset Screen: Release all keys when the Factory hard reset screen shows up.

6. Confirm Reset: Press the Power/Lock Key to continue or use the Volume Keys to cancel. Press the Power/Lock Key again to confirm the reset.

Following these steps will restore your phone to its factory settings.

Regarding what #2 said about the old GT540, yeah it is definitely a relic but still kinda fun to mess with. I agree with woeelrpoiy that you gotta be sure about why you are resetting it. Since you are worried about data, make sure to pull your SD card out before you do anything. If you have stuff on there, grab a cheap SanDisk ImageMate microSDXC 64GB or just use a standard USB reader to move everything to a PC first. Never trust that a reset wont wipe the card if it is mounted. Honestly, I would suggest syncing your contacts to a Google account if you can even get that old version of Android to connect to the servers, but manually copying files is safer. Be careful not to rush the process, just let it sit while it wipes so you dont brick it.

Man, seeing you guys talk about the GT540 brings back so many memories! I actually used one as my daily driver back in the day and it was an absolute trooper. Honestly though, instead of stressing about a hard reset on that old hardware, why not try reflashing the stock firmware if you can find the KDZ file? It saved my phone more times than I can count when things got glitchy.

• Honestly, just grab any reliable card reader from SanDisk if you need to offload your files first. They just work, simple as that.
• Forget the hardware keys for a second. If you can actually get into the settings menu, a factory reset from there is so much cleaner and usually causes fewer issues with the system partition.
• If you really want to keep your data, just sync your contacts with your account and move your photos manually to a PC. It is such a fun little device to tinker with, so dont give up on it yet! Getting these old androids running smooth again is such an amazing feeling!