Difficulty restoring an iPod

There are many posts and good answers about this, but they haven't sorted out my problem.

I have an older iPod (40GB, dock connector, 3rd generation I think). I was getting the folder/exclamation mark error on the screen.

I've charged the battery. Done a hard reset. It ket coming back to that symbol - and is in Disk Mode.

I then followed the suggestions of Mitch 751: Exclamation point and folder and...: Apple Support Communities

That led me to finally erasing the disk as he describes in his intermediate level steps.

I assume that is to get rid of any corrupt areas on the disk.

Then, plugging in again - iTunes recognized an iPod (no name now of course) and let me name it - then suggested I update it to 2.3. When I do that, it appears to update, but when it is supposed to restart (while being left plugged into iTunes), it never restarts.

I can add some songs to it, and sync. But when ejected, it remains in Disk Mode. So I can't see the menu system to play songs etc.

I've iterated through that a few times.

Now I'm again trying to do a Restore from iTunes. I've tried this a few times and it doesn't seem to complete. It just seems to not make any progress.

I get the little popup window saying 'Restoring "iPod"... with the bar below - but that bar continues to blue-band roll rather than coming up with a time estimate and bar progression as it does (it has run for over an hour without any change)

Suggestions? Perhaps I'm not being patient enough.