I assume you tried something like this? (from here
This will actually restore it to the same exact way you got it from the store, brand new, including with the un-updated software assuming that there have been updates since you got it. It's the Nook equivalent of restoring your computer with a fresh format and new Windows/Mac/Linux installation.
Pop out your SDCard if you have one installed, again just to be safe.
Turn off your Nook by pressing the Power Button on the top of it.
With it off, showing you the blank white screen, press and hold the power button until the screen flickers black for a second, then continue to hold it for another 12 seconds. You won't see anything happen at this point, the screen will stay white.
Repeat the above step 6 more times in a row. Yep, you read that right, 6 more times in a row. My assumption is they do this so people don't accidentally restore their Nooks during normal use.
Now press the Power Button once to turn the Nook back on.
You'll see the touch screen go black, with a sky blue progress bar, and a description of what it's doing, such as mounting the drive, formatting, etc. This takes a few minutes so be patient.
Once it does that, it'll boot up to your main screen, (it can take a while) with any previous version of the software showing, and you'll need to treat it just as you did when it was brand spanking new. i.e. re-register it, set the display name again, reload your screensavers, books and so on.
To update to the latest software version, press the "My Library" button, and make sure you're in the "My B&N Library" area; tap the "Check for new B&N content" button, it'll re-discover that it needs to be updated to the latest software, and automatically go through that process again for you. It can and often does take some time, and do some reboots, partition mounting, etc., so just be patient and let it do it's thing.