How do I use iTunes for 2 different iPods?

I just got my sister her first iPod, but her daughter's iPod is already set up on her computer. So we want to enable iTunes to support 2 iPods.
I was told that the only way to do this is to select certain playlists to be synched with one iPod and other playlists with the second iPod. However, I don't know how to do this.
My greatest concern is that as soon as I plug in one iPod it will automatically download all files. How does iTunes distinguish one iPod from the other?
This shouldn't be so hard. Any help would be great!
Thanks!
Nano   Windows XP  

There are a couple of methods for using more than one iPod on a single computer. Method one which has already been described is to have two Mac or Windows user accounts which by definition would give you two completely separate libraries. Method two is to set your preferences so that either one or both iPods get updated with only certain playlists within one library. Have a look at this article and see what you think and go for whichever you feel suits your needs best: How To Use Multiple iPods with One Computer
Another option when using a single library is to set one or both of the iPods to manual update: Managing content manually on iPod
Choosing the update option "automatically update selected playlists only" allows you to create a playlist specifically for each iPod and drag the tracks you want into it. If you tire of the list and want to change it, you just add or remove the songs you don't want. The ones you take out out remain in the library to be used by the other iPod. Make your playlist a Smart playlist and limit the size to just below the advertised capacity of your iPod ( for example, around 3700MB for a 4GB or 1800MB for a 2GB Mini or Nano). You can read more about playlists at these links:
iTunes: Creating playlists of your favorite songs
How to create a Smart Playlist with iTunes

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