I cannot thank-you enough for your information.  We ran across this exact same bug today and through the magic of Google found your post here.  Your write up and explanation of your troubleshooting and your posted work around was wonderful.  It reall...

I have a 3750-E that is doing the same thing.    When I power it up it, much like Duncan's, it only displays:Using driver version 1 for media type 2Base ethernet MAC Address: 00:22:90:28:ab:00Xmodem file system is available.The password-recovery mech...

Are you using fiber between the Nortel 1850 and the 6509? If so you may need to force the fiber port you are using on the 6509 to the correct speed and duplex settings.