I have the same issue, and I've found in Pioneer X-HM50-S specification the Compatible Generations:
+From September 2006 onwards+.
My iPod is a 5th generation and not a 5th generation late 2006 which can be identified by the last 3 digits of the serial number (V9K, V9P, V9M, V9R, V9L, V9N, V9Q, V9S, WU9, WUA, WUB, WUC e X3N).
So at this point I suppose only Apple can provide a firmware upgrade to allow the compatibility with the Pioneer dock.
I have a Pioneer X-HM50 and an Ipod 5g late 2006 (serial number ending in V9M).
The same thing happens : i dock it, get the message "ok to disconnect" but otherwise the ipod does not interact with the Pioneer device. i suspect that only 6G Ipod classic work.
Is there a way to upgrade an ipod OS 1.3 to something later ?