IPod Nano 8gb problems with iTunes/iMac

Bought a brand new iPod Nano 8gb last night. I am trying to use it on an iMac G4 1 gigahertz with OSX 10.4. This computer is not online. I downloaded itunes 7.0.1 from a neighbors computer and installed it on my imac and it seems to work fine. I can hook up the Nano to the iMac with no problem. Itunes recognizes the Nano and seems fine UNTIL I click anywhere in the itunes window woth the Nano plugged in, at which point itunes disappears from my screen. I can relaunch it, but the same thing happens again. Itunes works fine without the Nano plugged in, but not with the Nano.
I called Apple Support, and was told I HAVE to be online to use both itunes and the new Nano I am online at work on a PC, but don't have internet access at home. I have no desire to download songs online, or do anything else online at home, I just want to be able to put my own existing CD's on my Nano to listen to away from home.
Any ideas? Do I HAVE to be online to use iTunes 7 and the new Nano?

I guess I'd better clarify this for my own sake. By "update" are you referring to changing music, folders, artists, etc? In which case, I realize that I would need to update my Nano to reflect any changes I make to my music files. If by "update" you are referring to making a software or firmware change through an internet connection, then I would think this would be a rare occurrence that could be done at a friends computer.
The Apple "help" person on the phone said that I couldn't even USE my Nano without being online. Period. That the new Nano and new versions of iTunes REQUIRED an internet connection to function properly.
At the Apple authorized dealer where I bought the Nano, they said there is no need at all to be online, as long as I have the proper versions of everything (OS, iTunes, etc) installed, it should work fine, there is no need for an internet connection. (Unless I want to actually download songs, of course) They have burned a CD for me with the required updates they feel I will need, which I will install later this evening. Hopefully that will work.
It makes no sense to me that I would be REQUIRED to be connected to the internet in order for the Nano to simply be able to playback songs I have stored on my iMac, as I was told by the Apple help person the phone. He made NO effort to help at all, saying repeatedly that as long as I was not "online" with my iMac, the Nano and iTunes would not work, saying "What part of this don't you understand?"
Then he hung up.

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