I Have An Answer!!! After numerous hours of going through these posts, spending hours going through the trial and error of fixing, an answer has finally appeared!!
This blog
http://echeng.com/journal/2006/09/23/itunes-7-broke-my-ipod-nano/
Has a solution of changing the disc format thing me jig here it is:
Start -> Run -> compmgmt.msc
Drill down ‘Storage’, highlight Disk Management
Plug ipod in. Wait.
Make sure the computer management window is the topmost window. If you don’t, you won’t be able to get in there and change the drive letter of your ipod. The ipod will disappear out of the computer management window once itunes rejects it, or accepts your acknowledgement that it’s rejecting it.
Then I think i right clicked on the volume (or something) and changed the drive letter.
Just to make sure windows remembered my change, I ejected the pod and plugged it in again. Looks like it was mapped to the letter I had specified. Don’t know if this setting will hold after a reboot/cold boot.
You may want to scroll through the comments- For vista instead of run go straight to control panel, system and maintenance scroll to the bottom and create and format hard disk partitions, plug ipod in put it as G and hey presto!! hope this works for others.... before syncing with ipod if all this works you may want to download music rescue (brilliant and reliable used it a few times!) and copy all your music from the ipod after formatting.
Really hope this helps someone out there as it did me and looking forward to hearing if it has.