Hmm, lots of possibilities of what could be wrong.
One thing right off the bat, you wrote that you tried loading music using Music Manager and Media Manager. If I am not mistaken, those programs use different database formats, so you cannot switch between one and the other using the same DMS. If you do, you will have problems. (I recommend sticking with Music Manager 2.3. It does not have some of the features of Media Manager, but I think it is more stable and easier to use.)
For the USB connection, 700MB in a minute is definitely closer to 1.1 speed than 2.0. Go into your computer's BIOS and make sure that High Speed USB is enabled. In many cases, the BIOS defaults to Full Speed, which is 1.1 spec. Also, if you have a motherboard using a less than ideal USB chipset (such as Ali), you could experience problems. If you decide to get a USB card, make sure it uses either the NEC or VIA chipset.
You should then run a scandisk on all your hard disks, choosing the options to automatically fix file errors. Also, before you shut down your anti-virus programs, run a full virus scan.
Even though you have tried it already, you might want to wipe the DMS again, and even consider reformatting the partitions (**caution** - make sure you know what you are doing).
If you take care of all of the above, then try to transfer again, keeping in mind that ideally you should not have any other windows open or programs running when doing the save/eject procedure. If you still have the same problems, post again!!
As far as the hack goes, it does not cause any "damage" to the system. An original DMS will continue to work in a hacked system.