The bottom button will return all settings to their factory defaults including MIDI drivers and patch maps. This is useful when the problems do involve MIDI I/O.
Band in a Box 2010 now allows the user to save custom preferences files. This will make it possible to use the Return to Factory Settings without losing all your personal settings.
Your personal settings for things like default style, most recent files, etc. will also be reset. This can be annoying but if it solves your problem it's probably worth it.
Another way to return to default settings, that's especially useful if BiaB won't start, is to rename the file INTRFACE.BBW in your \bb\ folder. If you rename it to ~INTRFACE.BBW BiaB won't find the file and will restore all settings to the factory defaults. If you wish to restore the file it's easy to find it as the ~ will put the file at the top of the files list in explorer.