This particular error message is usually indicative of a hardware issue with the iPod. As to what exactly is the problem is hard to say for sure, but usually it's with the iPod's Hard Drive.
What happens if you manually force the iPod into Disk Mode using the instructions in the Apple support document below? Can you get that far? If so, try connecting it to your PC in Disk Mode. From there, you may get iTunes to recognize the device or perhaps even just your Windows PC, in which case you can try a low level reformat of the device to help try and clear up some of these drive errors.