That iTunes thing sounds odd.
Anyway, uninstall iTunes completely. Download (again) the latest version of iTunes onto you computer; making sure you have the correct version for your OS and Country. Do this with the iPod unplugged. After installing, re-boot. Open iTunes and connect the iPod.
If that still doesn't work, try and do the same on a different computer. If it works fine, its an issue with your PC. If it does the same thing obtain a new wire to connect the iPod the the PC with. Try using the wire on both PC's again. If the problem persists we now know its a faulty iPod. Call Apple or the store you purchased the iPod from, explain what you have done and they will then advise appropriately. This advice will most likely be to send the iPod off to Apple or return it to the store.
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If you call apple first they will tell you to do that so you might as well do it beforehand. Sorry i can't be much help but at least theres a strategy for determining the problem and a step towards fixing it.
Tomi




