Q: Gave my daughter my old iPod 2nd generation .how does she create her own I.d. And password without interfering with mine on my new iPod 6.

Suggest you see this, Create an iTunes Store, App Store, or iBooks Store account without a credit card or other payment method - Apple Suppor… or you can look into Family Sharing. Family Sharing and Apple IDs for kids - Apple Support  or you can also look at this explanation page. Family Sharing - Apple Support

Family Sharing doesn't work completely with anything below iOS 8(? Feel free to correct me)

This article will also be helpful: iOS: Sign in with a different Apple ID in the iTunes Store, App Store, and iBooks Store - Apple Support Steps will be similar to your iPod 2nd gens menus

True. Wasn't determining what the old iPod was or running. Missed the 2nd gen in the title. If it is an older one, the best answer is to create the Apple ID as indicated in the first link I provided with no credit card.