My friend's iPod Nano has suddenly overheated on the back, causing the metal casing to expand rapidly and is now larger than the plastic front, at the same time the iPod will not move past the Apple Logo point.

As I have said this is very hot to the touch, much hotter than a normal Laptop would get during battery recharge. Does anyone know the case of the fault, and will it return to normal working order once the metal casing has cooled?

Thanks

Sounds like short circuit or something... My advice is to contact Apple immediately. Almost certainly broken.

possible leaking of battery too?

either way it needs to be fixed/replaced.

Go to this link for Apple's support under the 12 month warranty:

http://www.apple.com/uk/support/ipodnano/