Default [Q] Stock Nexus S stuck in safe mode with storage encryption

I have a stock Nexus S that randomly shut off one day and rebooted into safe mode, asking for the password to decrypt the storage. Unfortunately, I never activated the storage encryption. I've tried every screen lock passcode or password I've ever used on ANY phone to no avail.

If at all possible, I'd like to save some of the data on the phone. I've tried rebooting (constantly reboots into safe mode), removing the battery, hooking it up to the pc (unable to do with encrypted storage), clearing the cache (I do have access to the boot menu).

Has anyone seen any similar issues? Is it likely that I will be able to access the memory at all, or is the fact that it's suddenly encrypted indicate some problems with the memory? I would just like to be sure that a factory reset is the only option before I actually do it.

Thanks all in advanced