This is a 4th gen "classic" iPod, correct? Try doing a Reset on the iPod
A Reset "reboots" the iPod. The iPod is not erased. However, that message you described, "there was a problem and it suggested that I restore to factory default," might indicate data corruption or other problem related to the iPod's hard drive. So a Restore may need to be tried.
NOTE: If this is a 4th gen iPod and it is connected to your MacBook using a USB docking cable, you may be asked to connect it to a power adapter as the last step of the Restore process. So, hopefully, you have the white square power adapter that came with that iPod, or another Apple USB power adapter. (That iPod model also connects using FireWire, with a FireWire docking cable. There is no connect to power adapter step, if a FireWire connection is used.)