What a horrible thing to happen. Please keep us posted or PM me, I have anxious thoughts a lot and a very common one for some reason is of this happening to me. It's very, very sad and especially seeing as you've sank so many hours into it. I'm no expert, but even though it's a physical copy, shove the SD card into your computer to see if it's broken and if you can repair it because some of NL's data is saved onto the SD card. Put it in another DS (if you have one) and see if it's the same issue. Take a Q-tip and clean the contacts but for the love of god don't use any water or rubbing alcohol while you do this.
Please resist the urge to blow on your cartridge.
I NEVER knew that blowing on the cartridge was bad, thanks!
Regarding SD cards and changing them:
The SD card has your update data for welcome amiibo and your screenshots, that should be all. I had to switch out SD cards a month ago because my old one was full and with my old camera I wasn?t able to transfer files from my card to my pc. (ideally you should transfer files between cards and that?s what most people do) I was scared that something might get messed up if I used a blank card, but I was only missing some settings I did in my 3DS menu (design changes/downloads etc.) and all downloads from the eshop. After starting the game I was told to update as NL won?t run without welcome amiibo if the game was ever started while the update was installed. When the update was done I could play the game without any issues.
Now I haven?t had your issue before (*touches wood) but IF there is an issue with the sd card, like others here suggested, you can also check that by inserting a blank card and redownloading the update (try to open the game and it will ask to update).
I really hope this was just a one-time error and everything works out. Please keep us updated as this issue could happen to anyone so we should know what to do.
If the issue keeps appearing I would keep the cartridge safe and do some research. I mean, even if the system can?t "read" the data, that doesn?t mean the data is lost. There are some cheat devices (for use without computer) that read cartridges, so there should be other ways to read it: Maybe there are tools that allow you to transfer a save-file from the cartridge to your coputer and onto a new cartridge? Maybe there are people who spechialize in recovering save-files from broken cartridges - I mean that exists for your computer, so why shouldn?t someone do it for games?
Also you mentioned that you could see your town in the starting menu and got as far as selecting your name.
So if anything, we know that your town is still on there!