According to Logitech you have to unplug it first:

Reset by powering off:

Unplug your Squeezebox Radio.

Press the More button while simultaneously plugging your Squeezebox
Radio back in.

You should see the following message:

‘Factory Settings Restored’

Your Squeezebox Radio should now be reset to the factory defaults and
is ready for re-configuration.

http://logitech-en-amr.custhelp.com/app/answers/detail/a_id/13945/~/resetting-squeezebox-radio-to-factory-defaults


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copperstate
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