Yureka!!!! I found the solution!!! Even ended up educating the tech -- who didn't have a clue.
I have a brand new 7th gen iPod Nano, a brand new Windows 8 laptop, and iTunes 11. Everything was working all fine and dandy until I unchecked "Enable Disc Usage in iTunes on my iPod. Then all **** broke loose. I got the blue screen of death with the WDF_violation and I couldn't even plug my Nano in without it crashing my computer, let alone access iTunes to re-enable Disc Usage. Because the crashes happened immediately after I did that I just KNEW it had something to do with that. Trouble is, I couldn't fix it.... or so I thought.
I was on the phone with the tech, who was telling me it was a driver issue ( impossible because both the laptop and iPod are brand new) and I was looking around in iTunes while she did.
HERE IS YOUR SOLUTION: Edit --> Preferences --> Devices. Check Prevent iPods, iPhones and iPads from syncing automatically. Then plug in your iPod, re-enable the Disc Usage, and voile!!!!!! Problem solved.