Brand new Shuffle - not recognized in Windows or iTunes

I just got an iPod Shuffle 1Gb for Christmas (today). Followed all the instructions installing software, etc. Plug in the iPod - the light on the front flashes orange. Does not show up in My Computer, Device Manager or iTunes.
Uninstalled iPod and iTunes software, rebooted, installed latest iPod and iTunes software downloaded from website. iPod still not recognized and still flashes orange when plugged in to a USB port. Tried several different USB ports - no change.
Rebooted again (more than once).
iPod is fully charged.
iPod has been reset.
I can't restore it, because even the iPod software doesn't recognize it.
My USB ports are fine - digital camera and external USB hard drive still work when plugged in to the various ports. Unplugged all other USB devices and iPod still wasn't recognized.
All my friends love their iPods. This is my first one. I have to say... I'm not impressed.
As I said, this was a gift, so I don't have a receipt for it, and there isn't an Apple store near me. And I think having to pay $30 to send it back to Apple so they'll replace it with a "new, used or refurbished" iPod is bullsh*t.

I had the same problem today.
What I found is that during the install routine, the Shuffle was not formatted. I went through Windows Explorer (right click on "Start" and choose "explore"). My computer found the shuffle as a removable media, but when I tried accessing it (clicking on the drive while in explorer), I got a message saying that it wasn't formatted. So, I said yes to the prompt to format it and as soon as it did, iTunes saw it and started the rest of the install routine. I had to restart and replug in the device, and it seems to be working great.
I don't know if this will help you out, but it is worth a try.
Merry Christmas
Shuffle   Windows XP Pro  
  Windows XP Pro  

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