Okay, first up... there should be no problem with the 7.02 firmware files.
Secondly make sure the power cable is tightly and securely fitted on the DMS cradle.
Thirdly the DMS, is it an original - or could it have a non-phatnoise disk in it?
Right, let's assume it's an original disk and move on. Can you clear your 'My Documents\PhatHack Media Manager\Logs directory' so we have a nice clean base to work from?
Let's assume the box is unhacked, fire up the DMS tools.
Click on 'DMS Tools Mode'
Select 'Audi 7.02' as the firmware
Ensure the option 'Install non-hacked firmware' is checked
Ensure the option 'Reflash box with firmware' is checked
Click 'Repair DMS (FULL)'
Once this is complete, check the log directory and open up the file showing the repair procedure. Please post the contents so I can take a look and make sure everything has worked as it was meant to have. Once you've done this, load up a single playlist onto the DMS in your software of choice and then fire the DMS in the box. Let it load up and let it run for 20 minutes or so.
How do things go?