Success !!! .... one Z C860 unbricked :-)))
Everything in my previous post seems true, and is explained in more detail below ...
1) THE BATTERY & CHARGER CIRCUITRY:
The Zaurus has a system to protect its circuitry, which can only be powered directly from the battery (with the excpetion of the service menu). The AC/DC charger charges the battery, and the battery powers the Zaurus circuitry.
There is a voltage level flashed in memory - this should be 4.2v = a fully charged battery. When the battery is fully charged (=4.2v) the AC/DC charger cannot send current through to the battery (preventing overcharging and damage to the circuitry). When the battery voltage drains below this, the AC/DC charger can then recharge the battery, and the LED light will be on continuously. When the battery has charged, then no further current can flow through to the battery, and the LED blinks intermittently.
2) THE PROBLEM:
The problem that arises is that the voltage level which is flashed in memory becomes erased - I have not explored the reasons for this, but it happens. With this erased, then current cannot flow from the charger to the battery, and the battery drains such that the Zaurus won't boot (= bricked). Put in a new battery, and the Zaurus works again for a few hours until this new battery has drained.
3) THE FIX:
Now, there is only one way to flash a new voltage level to memory - via the service menu, which is accessed by holding down the D+M keys whilst pluging in the AC/DC charger. Here on page 2, option 6, is the Battery Voltage Adjustment. The Main Bat AD: is the present voltage of the battery. Flash data: - - is the voltage level stored in the Zaurus memory. You can flash the present voltage of the battery into memory by pressing the [Home] or key. But this will only flash the present battery voltage level, and there is no way of changing this. And if the present battery voltage has drained, then there is not much use in flashing a low voltage into memory - you need to flash a working voltage (preferably 4.2v).
What I did was simply charge my battery outside the my Zaurus by just connecting a wire from the positive centre of the charger to the positive battery terminal, and from the negative outside of the charger to the negative battery terminal. I then monitored the battery voltage level as it charged using a multimeter, and stopped charging once the battery voltage was 4.2v (it charged from 2.4v to 4.2v in about 2 hours).
Then, the fully charged battery was replaced in the Zaurus, and this voltage was then flashed to the memory.
Success ... Zaurus unbricked, and all working perfectly.
I hope this HOW TO can be useful to others with the same problem of the battery not charging, and who suspect that the battery is a dud or the Zaurus circuitry is faulty.
Best wishes from Down Under.
-- Aussie