Here is a email reply I got back from "Sally"
Thank you for contacting Sony support. We are sorry to learn that your Sony HAP-S1 has developed a fault seeing songs on the internal drive.
In regards to your query, please note that unfortunately you cannot downgrade to an older firmware version.
Moreover, we would like to clarify that your HAP-S1 is what Sony describes as an 'IWX' product. This term describes a product that is not economic to repair if it fails, and is therefore classified as an 'in warranty exchange' item during the one year guarantee period.
In the event that an IWX product fails during the guarantee, it must be returned to the supplying retailer for examination/exchange.
Should you have any further questions, please feel free to reply to this email.
Yours sincerely,
Sally
Sony customer support
Sony Europe Limited