It sounds like you are having trouble restoring your iPod classic using iTunes and are getting a message that your iPod is being used by other applications. I found a couple of articles that I recommend for an error like this.
I would start by seeing if there are any conflicts with security software:
If you are still having trouble after following the steps in that article, you may want to put your iPod in Disk Mode:
Thank you for posting in the Apple Support Communities.