I had similar problem, where my X-Fi sitting in a belt holster decided to try commit suicide by jumping into a 5-gallon bucket of grey water (thinset rinse water from tile work, for the curious). Got it out as fast as I could find it, and it was actually still playing when recovered, but quit almost immediately thereafter. I disassembled, dried everything out, and before putting it back together, was disheartened when discovering that it won't power on . . . until discovering that it *will* power on from an AC source. The battery even shows the charge it had when it got dunked when powering on in this fashion, but it simply will not power on from the battery alone.
Anyone know of a source for a replacement battery? The Vision:M was much easier to find, since it had a modular battery connector, but the X-Fi's appears to be soldered in ... which I don't have much of a problem with, except for the pesky part about actually finding a replacement. (Of course, if someone has some brilliant suggestion that I'm missing on why the Li-Poly battery included currently isn't working, I'm all ears ...)