Thank you for the details of the issue you are experiencing with your iPod. You have taken some really good steps already to troubleshoot this issue, but I'm not sure if you have tried resetting your iPod:
If the iPod continues to display this message after restoring it, keep reading for more possible solutions.
The iPod may have locked up. Reset the iPod. After resetting iPod, attempt to restore it in iTunes.
If none of these steps address the issue, your iPod may need to be repaired. You can arrange for service at theiPod Service Website.
You can find the full article here:
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