when I followed these instructions above, my ipod disk mode jumped from do not disconnect to okay to disconnect without me doing anything...?? Does someone know what is going on?

I think that is normal, if iTunes is running when you connect the iPod, and the iPod is NOT set to Enable disk use, or Manually manage music (which requires Enable disk use). iTunes recognizes the iPod and after the initial few seconds of syncing, the iPod's "disk" is automatically dismounted by the system, so it is OK to disconnect.

That may also mean there is no problem with your iPod. Your original problem may have been resolved by a Reset of the iPod, which is done when you put it into Disk Mode (when you press/hold the first two buttons). Try doing a Reset now

http://support.apple.com/kb/ht1320

to take it out of Disk Mode. See if it now connects to the Mac and iTunes normally.

When you put it in Disk Mode and connect it to your Mac with iTunes NOT running, and run Disk Utility, does the iPod appear in the Disk Utility sidebar?

No it does not. Would I need to do a disk repair?

Well, if the iPod does not appear in the Disk Utility sidebar, then you cannot do a Repair Disk on it. I was going to suggest (if the iPod appeared there) an Erase (reformat) in Disk Utility, and then let iTunes do a Restore.

Since it does not appear in Disk Utility, I think there is no data connection between iPod and Mac. The power connection uses different points on the dock connector, so it is still possible for the iPod to charge. The possible cause are:

Bad USB port on Mac - Make sure you are using a direct USB port on the Mac. Try disconnecting all other USB devices (except standard keyboard and mouse if used). Try more than one port. If you can test the port with something else that is similar, like a USB flash drive, to confirm it is working, that would be ideal.

Bad USB docking cable - If possible, try another cable that is known to be good with your iPod, or try your cable with another Apple device.

If you can rule out bad USB port and bad USB cable, the remaining possibility is a problem on the iPod, such as a bad dock connector or faulty logic board.

The iPod nano does not have a hard drive, like "classic" iPods. It has flash-based storage. Flash-based storage does eventually wear out (after a very long time with normal usage), so you should NOT reformat it once per month, if that's what you are asking.

If you are asking about the computer's hard drive, that is not related to this problem with your iPod. It would not hurt to run Verity Disk periodically. You have to start up from a different disk (such as a Mac OS X installation disc) to run Repair Disk on your normal startup disk.

A brand new cable can be defective. The dock connector has different points for data and power, so it is possible for it to charge, but not connect for data.

Since you don't have a way to pinpoint the cause any further, if you have an Apple Store nearby, you may want to take it there, to the store's Genius Bar. You can make a reservation at the store's web page

http://www.apple.com/retail/

to avoid a wait.

I have the exact same problem. Did you ever get a resolution?