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The way I understand it, in my local time, there was 5:59:59 pm and 5:59:60 pm today whereas the time normally changes from 5:59:59 to 6:00:00. The :60 one was caused by the addition of the leap second.
What most likely happened was that there was a conflict in the Zune's firmware relating to how the leap second was implemented and it caused a "catastrophic" failure.
One interesting thing that I've read is that if you open your Zune and disconnect and then reconnect the battery, the problem goes away. Of course, this most likely voids any warranty on the device. Something else that I read said that it could be impossible, in their opinion, to push an update that would easily fix the problem since the thing can't boot to install the update.
Edit:
Microsoft has issued its official statement and an FAQ on the Zune.net forums. After "the technical team jumped on the problem immediately," there appears to be a bug in the 30GB Zune's internal clock driver related to the way the device handles a leap year. Microsoft recommends allowing affected Zunes to run down their batteries, and come noon, GMT on January 1, 2009, it will be safe to plug in, restart, and once again rock out with the Zune.
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