Ipod disappears from itunes source list after installing update 1.0.2

i plugged in nano to install more music. itunes asked if i wanted to install update 1.0.2 on my ipod, i clicked ok, and it installed. But the ipod never restarted or reappeared in source list or windows device manager (except briefly in devices when connected screen on ipod appears - but clicking stop just produced an error message that there was nothing to stop). it just cycled on ipod screen through apple logo, main screen and connected. ipod works fine otherwise. tried resetting ipod, restarting pc, different usb (although the original works fine when recharging son's mp3), reinstalling itunes - all no go. can't restore ipod as not registering on itunes or pc. any ideas before i grapple with apple phone support?

All,
I've seen this one more times than I care to. At first, I thought I had a bogus unit. After replacing the first one, hooked up with a knowledgeable in-store associate who helped me part of the way.
Leodis' assessment of the update is correct. Apple needs to resolve the download portion of this update. It appears that the music, videos, and other content are downloaded, but the unit is left in an invalid state, causing it to cycle endlessly with the startup screen (Apple logo).
In the short term, the best advice is to NOT download the update.
If you are stuck with a unit still in this undesirable state, relax. There is hope.
First you need to disconnect your unit, and reset it. First slide the lock button back and forth (from lock to unlocked). Next press Menu and select (middle button) at same time, waiting for Apple logo to reappear (or disappear). Next press the Pause/Play button along with select button. This will take your unit to "disk mode". At this time, the screen should show a check mark and a message indicating it is ok to disconnect.
Before you reconnect the unit, it might be best to remove the iTunes software from your machine (using Add/Remove programs). I had to do this in order to get the software back to an "original" state. Basically, getting back to a point where you will be asked/prompted for updating the iPod software (of course, you will refuse this). Don't worry about your music, videos, etc. All of that library information should still be there in the original location (not the iTunes library location). You could also export the library, then re-import it later.
Now you can re-connect your unit up with your machine. Wait until it is recognized by your system.
Next go into "My computer" folder, you should see the unit there. You will want to right click the icon, and chose "format". This will re-format the internal flash hard-drive. Don't worry. It will not do anything to the ROM containing the bootstrapping software. Basically, you can't hose up this product, short of taking a hammer to it (which maybe by this point you might have contemplated that! )
After the re-format, you want to install iTunes again. Go thru the same motions as before. Bu this time, it will pop up a panel indicating that the unit is in themiddle of a restoration. That's ok. Click ok. Then, once the unit is recognized by iTunes (appears in left panel), select the unit, and go to Summary tab. On that page, you want to click on "Restore" button to restore back to factory settings.
During this restore, at some point, you will be prompted for that iPod update. Refuse it!! Don't do it. That's where we all got hosed.
After the restore is complete, your unit will be functional again.
At this point, go on your merry way and reload your media content back into the local library and then sync to your unit. This is also a good point to import your saved library info, if you exported it.
Enjoy the nano!!!
Sorry this is a long post. Unfortunately, it took a few days to figure this out. But at least it is possible to avoid the issue. I've verified these steps on both WinXP (home edition) and WinXP Pro.

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