The trick is sliding the display lock switch at the exact right moment, otherwise it will not engage. Here are the steps that have worked for my self and several other Xoom FE owners:
1. Power off the unit - if not already
2. Hold down the "Down" volume button at the same time you hold down the power button for 3-5 seconds.
3. While still holding down the "Down" volume button, release the power button and toggle the display lock slide a couple of times (located next to the volume controls).
4. The display should now show "Booting Recovery Kernel Image" and then the Android Robot will be displayed when the unit is in the rebooting phase.
5. Since the device is being Reset (erased and re-imaged), it is normal to see "Please wait for pre-load data" and this process takes about 6-8 minutes. The Xoom FE is now being Factory Restored to the original image.
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