I SOLVED the issue
Summary: I plugged it into a linux box. Installed HDDSuperTool. Selected the reset/hard reset menu option and voila! Not only the disk, even the files show up like nothing happened!
More details:
Actually I tried plugging it into linux way back when it first happened. And different from windows where it showed gibberish things and couldn't install the device driver, on linux the disk have always been recognized correctly (serial, size etc.).
But it showed IO errors and couldn't read anything, and that all tools are Windows only so there is nothing to do in Linux. Because of that I didn't put a much thinking over it.
Only today I've encountered the HDDSuperTool, and reading it's a linux tool I got an idea that since the linux recognizes the device with no problem I can try that tool and do an ATA reset to stop the self scan. And within minutes I got the device back alive!
I think Windows USB drivers are messing up with the recognition part and since WDR & WDMarvel are relying on Windows' drivers and recognition on the device they were worthless.