Can't update iPod software to 1.2.1

I have 30Gb iPod video. Currently running version 1.2 with iTunes version 7 on a souped up Mac G4. I can't get it to update to v1.2.1 as iTunes offers. Keeps coming back with 'cannot be updated because it contains files that are in use by another application' and 'the required file is in use'.
I know I've updated the software version before this, but can't get a handle on this problem.

You do not need an app at all to listen to audiobooks.
They are in your music library.  Just sync them and listen to them.

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