Hi shwoshbuck!
Have you tried running Chkdsk on your iPod?
First, restore your iPod, then run the chkdsk utility on your iPod.
Information on disk error checking is in this MS document:
How to perform disk error checking in Windows XP
Then, after you've run chkdsk, restore your iPod in iTunse again - does it still report your iPod as "corrupt", or not?
Also, are you upgraded to the latest version of iTunes? (To check, go to "Help > About iTunes" in iTunes). The latest version is 7.1.1.5.
If you don't have the latest, download it
here.
Then, try restoring your iPod once more when you have the latest version of iTunes.
(Also, make sure that you have the latest version of iPod firmware, which is 1.3.1 for 1st generation iPod nanos).
If none of those things work, then this post by Mitch, another forum member on here, might help with that exclamation point and folder on your iPod:
Mitch: Exclamation point and folder and nothing else
-Kylene