Does the iPod appear anywhere in Device Manager? To access Device Manager, click the Start menu, right->click on Computer (or My Computer in Windows XP) and choose Manage. When the window comes up select Device Manager in the left hand pane if necessary.
See the iPod listed anywhere? You may need to expand different categories to see all the system devices. It might even be listed as unknown or under the USB Host Controllers as a Mass Storage Device.
It might help to unplug the Shuffle and then plug it back in and what the Device manager refresh to see if you notice any additional devices listed.
B-rock