If the loopback test doesn't work it's the USB-to-Serial that is broken. If you are lucky it's just the firmware that got fried and the hardware is still good. If so you can use the DFU process to restore the USB-to-Serial:
http://arduino.cc/en/Hacking/DFUProgramming8U2Thanks for the link but the from what little I know the directions are for an earlier model arduino I noticed the back where you solder the resister on is not same as the R3 model I have, thanks anyway, wonder if I could just replace the chip on the board