This does not look good I am afraid.
There is a known issue, that is resolved in release VA.01.07/VB.01.07 (for the ProCurve 1700 Series) and PA.02.07/PB.02.07 (for the ProCurve 1800 Series), whereby this process will not work prior to the above mentioned versions when management VLAN is not set to its default of 1: System — Looping ports 1 and 2 fails to do a factory reset when management VLAN is not set to its default of 1.Please see the ProCurve release notes for further information.
Click here for the ProCurve release notes: http://www.hp.com/rnd/software/switches.htmIf this problem is encountered, then the only way to address this is to replace/exchange the switch.
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Now when you say incorrect VLAN setup do you have an indication of what may have been configured.
Have you tried every port to see if it is still in the management VLAN?
Is the switch still in a production environment or in testing.
Hopefully someone has overcome this before.