I've managed to fix my problem :)
The root cause of the problem is that my external drive (WD My Book Raid 1) has my library on it and had gone into hibernation while the phone was restoring the ios. This meant that when iTunes had finished installing the operating system on the phone and tried to reinstall the content it could no longer see the external drive. Why my drive is doing this is a different problem. Details of what I did to fix the problem...
Please note that these instructions are specific to my issue of an iPhone 3GS running IOS 6 with iTunes on a PC and the library on an external drive. It worked for me but proceed at your own risk.
Set iTunes to play content from the library so it is constantly accessing the drive and stopping it hibernating.
Make sure the iPhone is disconnected and turn it off ( to turn off press and hold the Sleep/Wake button for a few seconds until the red "slide to power off" slider appears, and then slide the slider).
In iTunes go to (menu bar) Edit, click preferences then devices in the top of the popup window.
In the device backups box is a list of the backups stored on your computer for your device with a device name and date. In my case the several failed attempts to restore the phone had left a few backups that are newer than when the phone was last working. I highlighted and deleted all backups FOR THAT DEVICE created since the phone was working. NOTE - YOU WILL LOOSE ALL CONTACTS, TEXTS, LOCALLY STORED CALENDAR ENTRY'S ETC. CREATED SINCE THAT BACKUP
Once you've deleted any unwanted backups click OK to exit.
Connect the iPhone to your PC
Put the iPhone into DFU (recovery) mode. There are various videos / guides online just search or try this one which is MAC specific but identical for a PC.
iTtunes will then guide you through recovering the phone.
For me, once the phone operating system had loaded (15 mins ish) this initially came up with an error message (100+ tracks couldn't be found...) but it did back up everything fine (took several hours). I even got back all scores on games etc. so am very happy. Of cause all progress, changes etc. made since the last backup were lost, but I'd rather loose a couple of weeks information than everything.
Note to self - backup more often! (and did someone mention iCloud.....?)
Good luck.
The stop sign shows that the file can't be played. This is usually due to a corrupt song. When the music app attempts to play one of these corrupt songs, it fails and skips to the next song. This is why you can't go back a song, since when you go back it attempts to play the song, fails, and goes forward (back to the song you started at).
Make sure that the songs play in iTunes, then delete the songs from your device and re-sync them from your iTunes library, making sure that the sync is complete before disconnecting the device.
Best Answer
This is how I solved it.
I first disabled music syncing for this device in iTunes to start over completely but interestingly enough, the tracks and playlists were not removed. I then manually deleted all playlists in the Music app and synced again (music sync was still disabled). This removed the playlists from iTunes (make a backup of your .itl-file before doing this if you follow these instructions) but left the non-playing tracks on the phone. After this I restarted the phone, but it didn't change anything.
Finally I changed the language (!) of the phone (because I wanted the error messages in English for this post) and lo-and-behold, suddenly the Music app was empty (except for the stupid U2-album Apple shoved down our throats some years ago). I then enabled music sync in iTunes again and suddenly it all synced as expected with all tracks playable.
If someone follows these instructions, I would suggest that you
Please let us know if this solved the problem.