does a factory reset erase everything on SD card also like music and pictures.
No it shouldnt touch your data on your SD Card but if you loaded apps to SD Card or install and uninstall apps regularly (Like Trials Apps) it is wise to occasionally backup card and romat card to remove unused or unneeded files left over from installs.... This saves you a large amount of issues with card and phone.
Now this is just a suggestion and not required but I learned that this helps when having card reading issues or phone rebooting issues.
