I have a older version of iTunes (11) on a different computer, so I just reminded myself how it looks...
From your previous (original) post
however when i plug in the 5.5 and hit the ipod tab there is NO "on this ipod" tab available.
The On This iPod tab is only visible when the iTunes window has its sidebar (along left side of window) hidden. When the sidebar is visible, the iPod appears in the sidebar, under DEVICES. To show what is "on this iPod," click the small triangle to the left of the iPod's name (in the sidebar), to drop down its content list (indented below the iPod). Click Music there. What you see to the right is the equivalent to clicking the On This iPod tab (and selecting Music), when the sidebar is hidden.
If the iTunes sidebar IS currently hidden, and you don't see the On This iPod tab for the 5.5 gen iPod, I don't know why... What happens when you DO make the sidebar visible, and select Music on the iPod's content list (in the sidebar)?
if i fill the itunes library does it use up space on my pc disk?
Yes. The song files are stored on your computer's drive. Take a look in iTunes preferences Advanced pane. There are TWO checkboxes there for Keep iTunes Media folder organized AND Copy files to iTunes Media folder when adding to library. Since your computer's library is currently empty, if you start adding songs to the library, my suggestion is to keep those two boxes BOTH checked. The iTunes Media folder is designated at the top of that preference pane, where it says iTunes Media folder location. You can change that location. For example, it can be on an external drive. By checking both boxes, you are telling iTunes to make a copy of song files and store them at that location, organized into sub-folders by media type, artists, and album.
It's up to you, but iPods that use a hard drive for storage (both of your iPods) are somewhat fragile. The iPod in my previous screenshot had its 20GB hard drive replaced by a 64GB compact flash card (on an adapter), which is sturdier. But I still store all of my songs in my iTunes library, with iTunes Media folder location set to use an external drive. My Mac is a desktop (not laptop), so that external drive is always connected and turned ON (when my Mac is running). And my complete user data is backed up to another VERY LARGE external drive, using a built-in automated backup feature called Time Machine.
i have all the tracks on my old mp3 player on a micro sd card so if the pods broke i still have the music safely there.
That's good. Having the songs in your iTunes library makes it easier to Restore the iPod (or set up another iPod the same way), because the songs are already there in your library. If you have playlists set up, the playlists are there too. If you use automatic syncing, it takes just a few mouse click to set it up for syncing again. Then click Apply and let iTunes do its thing automatically. You don't have to reload the iPod manually. So, it's a matter of convenience.