Remote Application

the remote app dont look for where your music is stored it look for a running instance of itunes

it's the same way as itunes look for other shared libs

when one want to connect as remote it will broadcast the request to all itunes client on the subnet
displaying in their devices and when the itunes user click on the icon they get 4 boxes to type in the code displayed on the ipod

if you had yours connected and it cant find it anymore try removing the link
and redo the bounding

library == itune connection
when it comes to remote app
it dont matter if your itunes got 100 various sources for getting it's media from
mine got 3 ext disks and 1 internal disk
it dont matter if itunes can see it the remote app should see it
all the remote app does it request itunes media list itunes keep track of where
those media files are located so thats no biggi

not sure if one have to setup ones itunes to share media for the remote app to get the list i would try if i were you
otherwise i would say it's a network or firewall issue

Have you opened your firewall to allow remote to work? If not
a. go to System preferences
b. click on security
c. click on the firewall tab
d. At this point, you can select Allow all incoming (not recommended) or Set access for specific services (recommended)
e. Click on the + sign at the bottom and add iTunes. Change Block incoming connections to Allow incoming connections if necessary.

You may have to add other applications to this list. Some will ask to be added. I always block them unless I have a specific need (such as Remote) to allow them.

Hope this helps.

i would try on another computer on another network to narrow down where the issue
is
also trying if the computer is a laptop to connect it to another network and try to connect there
problem is that the issue could be both in the computer and the router and it's hard to narrow down where as all brand of routers handle some stuff diff

connected to a router or adhoc?

forget the usb cable for now it dont have anything to do with the rest

the question now is how your computer is connected to the router
if it's by ethernet cable the ipod have to connect with wifi to an adhoc network
which may require the computer to be setup support internet sharing

I've got the same problem with remote app (except I'm using a 1st gen iphone w/ 2.0.2) I was hoping 2.0.2 would fix things --it didn't. Also, my itunes library is not just on an external drive, but on a NAS. I've tried every setting, reboot, firewall, diff. computer, etc. combo mentioned in these forums and the remote app still can't find the library. I enter the code, it tries to verify or whatever, then times out. What gets me is that itunes knows exactly when I stop looking for the library with the remote app because it instantly disappears from the devices list in itunes. They're talking, just not communicating.

I can't tell if it's a Bonjour thing or a port thing or what. But I really want this to work --dangit!

Open iTunes, at the top of the screen click on edit, then preferences, then Advanced, Make sure there is a check mark in the window for "Look for iphone & ipod touch remotes. Hope this helps.