Hi All,
Gee I am glad this post was around today!
I too purchased a 4Gb Nano (for my wife as a gift for mothers day), and applied the 2006-03-23 update.
I applied the update to my sons 4Gb Mini yesterday, and had no issues. I then applied the update to the Nano today, and then ITunes or Updater could no longer see the device. Also, it nearly ground my PC to a halt, while it seems to be "searching" the drive, although I could not access anything on the drive.
Well, I thought the Nano was faulty, so I took it back to the retailer (JB Hifi), who replaced it with a new one.
I took the new one home, connected it, checked ITunes, and all looked OK. I then applied the Updater to this new one (still under the impression that the previous Nano was faulty). Well, same thing happened. Nano effectively dead.
Then I decided to hit the Apple Site, and found this post, and read it intently, understanding what everyone else was saying.
Although, I was a bit nervous about formatting the Nano (it was about 3 hours old now !), I followed Dave's instructions at
http://screwdave.blogspot.com/2006/05/ipod-nano-updater-3-23-really-needs.html
Great work Dave, it was excellent. Worked perfectly, and I am now syncing music for my wife.
Thanks heaps, it worked a treat.