iPod touch will not sync music

I have my ipod touch 4g plugged in by usb to the computer.

It does detect it, but when I press Sync, it will update everything including transferring purchases.

It will transfer Music purchases, but not the other way around.

iTunes will not put music in its library into the ipod. (shows up in itunes library but not on ipod)

The notification bar thing at the top will say Syncing "ipod" and then determines which apps and music to sync.

BUT IT WILL NOT ADD THE NEW SONGS.

Another note is that the bar that shows the storage of the ipod: Audio 6.6 gb

i press sync --> Audio 7.5 gb --> (wait for a minute) --> somehow reverts back to Audio 6.6gb (see pics below)

The notification bar will revert back to an Apple logo and doesnt do anything.

I tried many things: reinstalling iTunes, hard reset of ipod, etc. (except restore, which i will not do since it wont sync music)

I have all the latest updates to all my stuff.

Anyone got any ideas how to fix this?

PICTURES:

before sync

upon pressing sync

after syncing