Success!!!
It appears that my original DMS has been corrupted. After playing the PhatHack/Phatnoise version of Bill Murray in Groundhog Day, I finally used the DMS that I recently purchased. My original DMS will play the existing playlists that are on it, but I can no longer make any changes to it. It is amazing how much time I wasted trying use it for the hack and trying to add/delete files on it. No matter what I did (delete files with PMM and Windows Explorer or use PMM's Delete All repair option), once I saved and ejected and then reinserted the DMS back into the cradle, ALL of the original files were back and PMM displayed 491.2 MB free on the DMS. Unbelievable!!! If anyone has any ideas on how this might be repaired, let me know, although I guess it really doesn't matter anymore since I now have two hacked Music Kegs.
VorTechS, thanks for your help and the hack wizard. Please post the link for donations and I will happily contribute.