What annoys me is that Sky won't tell you this fix - they'd rather you pay for an engineer to come out who may just try this anyway...
To perform a full reset and format the disk:
1) Switch off the box at the mains
2) Whilst holding down the left and right arrows on the front of the box (either side of the Select switch), power on the box. After a second or two continue holding the buttons in for about 20 seconds the Sky 'ring' will light.
3) Hit the 'Select' button on the front panel - this will reformat the drive and reset the box. This can take a few minutes and the ring will 'whirl' backwards to show it's working.
Once this is done, disconnect the digibox from the mains power again and this time press and hold the 'back up' button whilst you reconnect the mains power. Continue holding it for about 15 seconds until 3 lights on the front of the box come on and you get a full-screen message saying "Updating system software. Do not disconnect mains supply or satellite dish."
Leave the digibox doing its thing for about 10 minutes and it should be fixed! Try pausing and recording things again... hopefully you've just saved yourself £65.
If you've not been so lucky, you'll have to get Sky to fix it for you. Some people report that if you ask to cancel your subscription Sky sometimes offer a free callout to fix the problem - you're more valuable to them as a paying customer than the cost of an engineer callout.
Tony
February 2011