4G 3rd Gen Ipod Nano - "Appears to be Corrupted"

I'm getting the the following error:
"Itunes has detected and Ipod that appears to be corrupted. You may need to restore this Ipod before it can used with Itunes. You may also try disconnecting and reconnecting the Ipod."
I've tried connecting the new Ipod to my G4 Mac OS X 10.3.9 Itunes 6 and with my PC running Windows XP with Itunes 7.4.2 (most recent update as far as I can tell).
Is this a factory defect? I bought the nano a few days ago and it hasn't worked yet. The actual device itself looks fine, powers up and on, allows me to click through the menus and select all the categories.
Any advice here?

Did you get this error message on the PC? If you did, it most likely has a drive collision problem with something else attached to the computer. Connect the 3rd Gen Nano to a rear port on your PC, and connect your mouse and keyboard. Disconnect ALL other USB devices including printers, scanners, digital cameras, external hard drives, thumb drives, improbability drives, modems, etc. and disconnect from any network you might be on. Now change the drive letter of the iPod to something much higher like M or P ro Z, so long as you have no other devices using these letters.
http://docs.info.apple.com/article.html?artnum=93499
The 3rd Generation Nano won't work with either OS X 10.3.9 or iTunes 6.

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4G 3rd Gen Ipod Nano - "Appears to be Corrupted"

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