IContinual "recovery mode" cycle when iPod plugged in

I'd be grateful for any assistance with this one, this is my 2nd iPod in 2 days as the first one had a broken screen so i'm getting a bit fed up.
I have an 80Gig Classic and am running a PC/XP Home and the latest version of iTunes. I also have a Mac but it doesn't have a sufficently "new" version of the OS to support my new iPod so it isn't an option.
When i plug the new ipod in i get the message "iTunes has detected an iPod in recovery mode. You must restore this iPod before it can be used with iTunes."
I carry out the restore, the iPod disconnects and reconnects (in software, i don't unplug it) and up pops the same error message again. I've done the reset/reboot thing to no avail. I did once get as far as entering the name of the iPod etc. but my success was brief and as soon as i disconnected the iPod and reconnected it i was back to the recovery mode loop.
I hope this is something simple and i'm not going to have to return yet another iPod so all suggestions are gratefully received.

I have a similar problem with my 80 gig. Downloaded the 1.0.3 update. When the installation was finished, I got a message sayng I had to recover to use the iPod with iTunes. And so I did. Now all I see is the "do not disconnect". When I disconnect it anyway, it says "Ok, to disconnect", and when I reconnect it, the disconnect message reappers. No matter how many times I recover, the same message keeps popping up. Reseting the iPod does not work either.
Now, the problem now is that when I use the guide linked to, the iPod doesn't show up when I go to Disk Management, which means I cannot reassign any letter. I should note that I can't access it as an HD from My Computer, I'm only given a message that says "Insert a disk in station K:" In addition, Windows seem to be unable to identify any specs of the iPod, such as size etc.
So it seems like the update messed up my iPod. I have no clue on what to do.

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