I have the same thing going on.
Reset didnt work.
As soon as I plug it in it says Verifying "user" iPod 160GB
Anyone know how to stop it? Have to force quit iTunes to get restart it back then unplug iPod.
I may have to try this:
ERASE YOUR iPOD (MAC OSX)
If you have OSX, you can use Disk Utility (Macintosh HD > Applications > Utilities).
Select your iPod in the Disk Utility window and press the Repair button
Then press the Erase button to erase the iPod's hard drive. Extended Journaled should answer your next question.
http://www.methodshop.com/gadgets/ipodsupport/erase/index.shtml