problem fixed. try this.
start syncing your ipod. WHILE it's syncing, change setting on the ipod in the middle of the sync. i guess this way it forces the ipod to start transfering settings/data instead of laying stagnant not syncing...
the settings i changed were enable disc use. turning it off/on and applying the change while the ipod is syncing. i did that and switched the conversion rate and applied that too. then i changed the setting back and applied that. then i started deleting certain songs from the ipod while it was syncing. after about 5 songs i noticed the ipod was no longer stuck on the second song like it was and it was on song 22 and viola.
hope this helps. so you should be able to keep altering setting and forcing the ipod to transfer data until it works. good luck. i miss the old itunes too..