The dipswitch may be for draining the memory support supercapacitor (useful for resetting the CMOS when things get glitched). When you switched the dipswitch to "on", you may have caused a short-circuit to it. If I'm correct about this, best case scenario is that it just kept resetting memory and it can be remedied easily. Hopefully, you didn't drain the new 3.6V battery too. This is only a guess.
Hope this helps.