Good news, that output says the opposite of broken flash: your settings volume is back (/mnt/overlay is ubifs again, no more /tmp/safemode), and the flash's own counters are clean, 0 ECC failures and 1 bad block, which is normal. So it was one damaged write, most likely a power cut during a write at some point, not dying hardware.

Last step: set your password now, check ls /mnt/overlay/upper/etc/shadow exists, then reboot once. If it doesn't ask for the password reset again, you're done. Thanks a lot for the patience and the outputs, this found a real gap: the board falls back to "factory mode in RAM" without telling you, and I'll make it say so.