Ipod nano 3rd gen won't turn on and get unknown error 1437

I went through the steps to restore ipod nano 3rd gen twice now (resetting PC in between) and I get the error message "The Ipod could not be restored. An unknown error occurred (1437)." I can't find this error code on Apple website (I guess that's why it's "unknown"). The ipod is still unusable. What should I do next? (I am using latest version of iTunes.)