If iTunes 8 is not recognizing your iPod, I seriously doubt iTunes 7 will. First I would try it on another computer. However, if you want to go that route anyway...
Yes, you need to uninstall iTunes 8 before installing iTunes 7. I recommend that you reboot after you uninstall iTunes 8.
I'm assuming you've never had iTunes 7 installed on your computer? In that case, since you don't have an old iTunes Library to restore, you will have to reimport all your music after installing iTunes 7. In other words, when you launch iTunes 7, it will complain about not being able to read the Library, and it will create a blank one. All your music is still on your computer, it just won't be visible in iTunes.
