3rd Gen iPod refusing to update

Ok, here's whats happened, any help would be most appreciated.
I have a 3Rd Gen Ipod, and after updating to iTunes 7, it got completely wiped of nearly 4000 songs. I tried to update it several times with iTunes and it basically refused to do anything, and kept freezing my computer, and coming up with the message "The drive is not ready for use; its door may be open. Please check drive I: and make sure that a disk is inserted and that the drive door is closed." Very frustrating
I have since restored it many times and retried updating, again no joy. I then formatted it via windows (twice now) on the advice from the nice lady on the Apple Tech Support line. And have even changed the drive letter from I to J.
Now at least it will let me add music to it, but it won't let me put any more than 1.22Gb onto it. If i try and put just one more song on it freezes and either comes up with "unknown error occured (-53) " or unknown error occured (-124)
Also i have tried various USB connections etc, but none of it has made a difference.
I'm a bit loathed to give Apple £170 for a service when i could just buy a new iPod for not much more. So does anyone have some advice re the above problem?

bump....
sorry does anyone have any ideas?

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Message was edited by: Andrew1214

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