May I know whether you have been using the USB port ( Windows PC desktop) at the front of the computer or the ports at the back of the computer for charging the iPod?
Generally the USB Ports on the front of the computer are low powered USB 1.0 ports and the USB ports on the back of the computer are high powered USB 2.0 ports and it is recommended to connect the iPod shuffle in the high powered USB port.
The battery status light of the iPod is only approximate.
Though the green status light signifies good battery charge, the best way to decide the charge is to charge it for 4 to 5 hours and then continuously play it for about 10 hours. If the iPod plays for 10 hours then its good. Otherwise we need to service the iPod.
You can also go through the below article:
iPod shuffle (Second Generation): LED behavior after charging
http://docs.info.apple.com/article.html?artnum=304800
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The blinking amber light signifies that the iPod is communicating with your computer.
The steady amber (not blinking) light signifies that the iPod is charging and is not communicating with your computer at present.
For your information, the status light on the front part of your iPod shuffle must be blinking green for 3 seconds when the iPod is switched ON and should blink for a brief when the play/pause button is pressed. If this happen, then the iPod is working fine.
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