The newest version of iTunes should and will recognize all models and generations of iPods. What is displayed on the iPod's display when you have it connected?
Are you using the cable that was originally included with the iPod? Have you tried resetting it with it still connected?
A "scrollwheel 10G" (10 GB) iPod may be 3rd gen... If it's a 3rd gen iPod, the one with a "scrollwheel" and four "touch" buttons in a row between the screen and wheel (that glow orange), it will only work properly with a FireWire connection. Although it has a dock connector, it does not charge over a USB connection. If you Mac has a FireWire 800 port, you can use an adapter to connect to the old FireWire (400) docking cable.
Mine still works perfectly (it's had a few battery replacements) with the latest iTunes and Mac OS X 10.7.4. I think it has great sound...