I've got some information for you that may help you with this issue. You should check the "Group Compilations" setting on your iPod nano to see whether that option is on or off. More information on this setting can be found on page 16 of the iPod nano 6th generation User Guide:
You can also find more information on compilation groupings and how to get them to behave the way you expect here:
Thanks for using the Apple Support Communities. Have a good one!
Hey again TheHairyBaboon,
You may want to also try to restore your iPod nano according to the instructions found in this article:
Thank you for using the Apple Support Community. Due to the nature of your issue or question you may find more information by using another one of Apple's support resources - https://expresslane.apple.com/GetproductgroupList.action.
So I've run into a very similar problem. The artist is Gov't Mule. I have a large number of their songs on my iPod nano. One of the albums they did had individual songs paired with other artists, one of which was Steve Winwood. When I sync all that music onto the Nano, it lists EVERY Gov't Mule song as being by "Gov't Mule & Steve Winwood".
As a side note, I sync the same playlists to an iPod classic with clickwheel, an iPad, and an iPod touch. NONE of them exhibit this behavior.
I've checked all the settings, and factory reset it several times, and nothing changes.