iPod shuffle cannot play songs on shuffle?

This problem only started recently out of seemingly nowhere. My iPod Shuffle is a 4th generation one. I can sync the music in the iPod and it plays perfectly when it is set to the 'repeat' mode. However once I set it to the 'shuffle' mode the voice-over tells me to 'please use iTunes to sync music to this iPod'. When this message is read the yellow light will turn orange (it does not blink) and it will stay for awhile before disappearing.

There is also a problem with iTunes where it can only play 1 song at a time. There is no song 'up next' even though I have made sure to tick the songs I want. If I manually 'select all' and click 'add to up next' the songs appear but the shuffle option suddenly disappears. If I enable shuffle manually from 'controls' the songs disappear from the 'up next' list. This problem extends to the Playlists. The play button works perfectly well and there are songs in the 'up next' list but once I click on the shuffle button the music stops immediately or the songs from the 'up next' list disappears.

Both iPod and iTunes is at their latest version (iPod 1.0.1 and iTunes 12.3.1). I have tried restoring the iPod and re-installed iTunes. None of the options work and I have not seen any hint of the same kind of problem happening to anyone else. Once again there IS music in the iPod Shuffle (it plays normally on 'repeat' mode) but for some reason there are no songs in 'shuffle mode'.

Can someone please help? Thanks.

Windows 7