iPod classic suddenly stopped working without provocation

I would say that if I had to guess, I've had my iPod for about a year and a half now, tops. I'm throwing that out there because maybe my problem isn't uncommon for "old" iPods, and maybe I should have known something like this would be happening around now. Anyway, to the details.

About a week ago, my iPod 160 GB classic started acting like it had a mind of its own, ignoring when I'd try to skip a song until I'd pushed the click-wheel button several times. Then, a few days ago, on top of that, if I tried to pause a song, sometimes it wouldn't work, and sometimes it would pause for a milisecond and then play again, until I'd tried pausing it 5 or 6 times.

Today, while I was trying to work out and listen to music, when I tried to skip to another song, my iPod displayed the new song and then froze. I tried going to the Menu, I tried turning the volume up, I tried pausing and playing, and determined that it was totally frozen.

So I did what is always recommended first when problems crop up, and what has always worked for me in the past, and I tried to reset my iPod. It didn't register the lock was on at all, but it did reset. So I tried to listen to music again, and immediately ran into the same problem. I tried to skip the first song in my randomized library and the iPod froze up.

This time, when I reset my iPod, it got stuck on the gray screen with the white Apple icon. I waited long enough to guess that it wasn't going to do anything, then I tried resetting it again. Again, it never got past the apple screen.

My brother recommended I try to plug it into my PC to see what's up, so I did. ITunes stated that it detected a device in recovery mode and I needed to restore it, etc. My computer also told me that I needed to format the external device in the disk E. I tried restoring it, multiple times, and that didn't work. I also restarted my computer and tried again, and it isn't working. I tried formatting it with my PC, and that didn't work.

It's also making loud noises, which is unusual. I can hear the whirring and clicking of the inner mechanisms, and it sounds like a death rattle, to me. Or else a mortally injured animal trying to drag itself to help and leaving a trail of blood behind it.

Anyway, so I was hoping to find out if this is a "normal" problem, or if maybe I damaged it somehow without realizing it. I know dropping it can damage the hard drive (personal experience with a previous iPod), but nothing like that has happened to it. I guess it could have gotten wet, but not very much, because the only time it's had water around it was when I was doing dishes. I'd wipe my hands off before touching the click-wheel or anything else, but there was still moisture in my skin and it would leave tiny moisture droplets behind once or twice. I dried it off, but could that have caused this? My iPod was working just fine until a week ago, and it was still working until just an hour ago. Wouldn't water damage be a little more abrupt?

Okay, any thoughts and advice would be welcome. I want to know what my options are, so I can decide if I should just give up on my iPod or not.

Thanks!