error 4000?

I'm sorry that didn't work. I have read a few other threads and seen a few videos that suggest that it might be due to a faulty iTunes installation or the iPod locking during the update. The latter might be easier to test out first:

Turn off locking on iPod: Settings > Display & Brightness > Auto-Lock = Never

Remove & reinstall iTunes: https://support.apple.com/en-us/HT204275

I'd be interested to know if either of these steps work for you.

Definitely create a backup, but here is some additional information speaking to those points.

Direct from an Apple article.

'Media that you buy from the iTunes Store or songs that you import from CDs are saved in your My Music folder by default. They won't be deleted when you remove iTunes. Although it's highly unlikely that you'll lose any of your iTunes Library when following the steps below, it's always good practice to make regular backups of your iTunes library.'

Full article: https://support.apple.com/en-us/HT204275

Separate, user-generate article on Apple discussions: Playlists

'Playlists are stored, along with the locations of all media in the library, ratings, links to artwork downloaded from the Store, etc. in the iTunes database - the iTunes Library.itl file that is, by default, stored in C:\Users\username\Music\iTunes.'

Full post: https://discussions.apple.com/thread/7020749?answerId=28169841022#28169841022

Double check that this is how your system is setup.

Here are the steps Apple recommends if you see an error message when you update or restore your iPod: https://support.apple.com/en-us/HT201210

I hope this is helpful!

See instructions in link above