iPod Won't Connect/Boot in Diagnostic Mode

Hello

My ipod started not connecting to my Mac. The ipod says "connected/syncing" but the os and iTunes don't see it. It shows in the System Profiler under the usb tab that it's connected, but it doesn't mount. Disk Utility says it's connected but can't mount. Tried to run very disk, it errored and said "this disk needs to be repaired". Tried running the repair disk and again it errored, but this time saying "the disk cannot be repaired, backup data and reformat the disk". So, I then tried to boot the ipod in diagnostic mode, but it keeps booting normally. It's been running sluggish for a while and I fear the hdd is failing, but is there a way to fix this issue so I can back it up and run a restore?

I have already tried to connect it to another computer with the same results.

The weird part is it still runs/plays fine when not connected and I can access all my music/playlists.

Ideas??

iPod 160GB Classic

Mac OS 10.6.8

iTunes 11.2.2 (3)