OK. This has been wearing me out for a couple of weeks. I finally took the time tonight to figure out what's going on... Look at this link for the definitions of the error codes.
Error code 54 indicates "Software lock on file; Not a subscriber"
I figured out that there is a locked file somewhere that was causing the problems. As painful as it was, I restored my iPod and then unchecked all of the blocks so that nothing would sync. I created a new playlist, manually dragged about 4 or 5 artists at a time into it and then synced my iPod. After a while the error 54 popped up. I went into the iTunes folders of the last five that I just synched and looked for a locked file. Sure enough, there was 1 that was locked. I unlocked the file and kept going down the list 4-5 artists at a time to make sure there were no others. Turns out that the one file is what kept causing this error and prevented me from synching my entire library onto my iPod.
I don't think a restore is necessary to do this but you'll probably have to remove all of the songs/pics/vids from your iPod. I imagine a locked file whether a photo, song or movie will cause this error. The whole process took me an hour to go through. I don't have a big library so I feel for those of you who do. It was a better alternative to checking each of the files in finder because the dreaded "54" would pop up when sync encountered the locked file.
Anyway, worked for me and I hope it helps some of you.