this topic is reeeeeeeallly old!
but hopefully this will still help people!
I HAVE THE SOLUTION! READ THIS:
if when you plug your ipod in it says 'usb device not recognised', here is how to solve the issue,
unplug your ipod from the pc
put you ipod into disk mode; toggle hold on and off, press and hold menu and select buttons, when the screen changes quickly press and hold select and play key, the screen should now say disk mode and have a big tick, if not keep trying.
now your ipod is in disk mode, plug it back into the computer, the computer will now recognise it, it may want to install an update, if it doesnt do it automatically then load the ipod updater and do it yourself, when it has installed the update it may not recognise the ipod anymore, dont worry, just unplug it and plug it back in again, it will then load for a while, when it sqays ok to dissconnect on the ipod screen unplug it and oput your ipod back into normal mode; toggle hold on then off, press and hold menu and select keys and hold for 6 seconds. plug the ipod back in and sorted! your ipod should work now
good luck