The hole on the bottom should be to the microphone.
If it is something giving you a hassle on the device, you may want to try loading in "Safe Mode" and see if you can resolve the problem that way, prior to wiping the device.
To get into "Safe Mode" please do the following.
1. First turn off the phone.
2. Next press and hold "Power" until you see the manufacturers logo on the screen, then release the power button.
3. "Quickly" press "Volume Down" and hold it for few seconds until you see the message "Safe mode: ON" or something similar.
4. If you wanted disable it, simply repeat the steps above, and you should see "Safe Mode: OFF" rather than on.
You can't get it to do a "Hard Reset"? That seems rather odd, unless there is a...