How did you initially delete everything from the device? It may be worthwhile running "javaloader.exe -usb wipe" or "JL_Cmder.exe" to do a fresh wipe to start.
You've mentioned that you can hear the device connecting and disconnecting within windows. Is the device re-booting as well (does the screen keep turning off and on)?
I would try, as John Clark has suggested, working with these instructions: What to do next if Jl Cmder will not connect and wipe - BlackBerryFAQ.com
In my experience it is tricky to get the timing for steps a1 through a5 right. Try following those instructions a few times:
1) Run loader.exe /nojvm
2) remove and re-insert the battery from your device
3) plug your device into the USB immediately
4) click "Next" as soon as the USB is recognized (even if it shows "Unknown")
Try it a few times to see if you can manage to click "Next" before it goes to error 507.