In order to hard reset a HTC Dream, you should perform the following steps.
Remember! Hard reset will delete all the data on your device; pictures, contacts, messages, apps and more.
HTC Dream device will be brought back to the default configuration of a brand new device.
1. Turn off the device.
2. Hold down both Home button and Power button simultaneously. Hold them down until a black screen with a warning sign appears.
4. When it appears, press L + Alt.
5. Select wipe data/factory reset by pressing Alt + W.
6. Afterwards, press Back + Home buttons. This will cause the device to reset and restart. Good job.