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Problem: Artwork in iTunes won't transfer to iPod
Before you begin, make sure that songs have album art in iTunes. When you play a song in iTunes, it should be displayed in the bottom-left corner if iTunes.
For instructions on how to add artwork, see this link...
iTunes: How to Add Artwork to Songs
If artwork is in iTunes for several songs, but that artwork is not being displayed when you play a song on your iPod (if it has a color display), try the following...
First, connect the iPod and open iTunes. In iTunes, go to edit-->preferences. Click the iPod tab. Make sure "Display album artwork on your iPod" is checked. Click OK.
If the option is checked, uncheck it. Click OK. Now go back and reenable the option. Click OK. Let the iPod update. The album art should now be there.
If that doesn't work, then go back and disable the artwork option while the iPod is updating music. Then when the iPod is done updating/syncing and iTunes says that it is OK to Disconnect the iPod, go to edit-->preferences in iTunes. Click the iPod tab. Now check "Display album artwork on your iPod" Click OK. The iPod should begin updating and iTunes should say "Optimizing Artwork for iPod." Let the iPod finish updating.
If the above steps do not work, then let the iPod finish updating. Eject it from the computer through iTunes. Now connect the iPod back up and reenable the option in the iPod preferences in iTunes. Try this a few times if it doesn't seem to be working. iTunes should say "Optiming artwork for iPod" when it works.
If those last few steps do not correct the issue, then please try the steps listed in this article...
iPod: Artwork missing from songs
If the artwork will still not appear, you may need to restore your iPod. That should fix the problem...
Restore the iPod
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