IPod not connecting to Win 7 PC with iTunes v10

OK, deep breath, because I'm really annoyed.
IPod nano 3rd gen ran fine on win 7 PC with iTunes v9. Upgraded to itunes v10 and now the ipod & itunes refuse to communicate with each other. I've spent the last 2 days uninstalling, reloading refreshing various drivers yet I'm no further forward.
I've run through these 2 helpfiles in detail: http://support.apple.com/kb/TS1538 & http://support.apple.com/kb/HT2292 with no success.
With the ipod connected Win 7 device manager has the Apple Mobile Device USB Driver under the USB section & shows Apple Ipod USB Device under the Disk Drives section. There is no ipod drive listed in 'my computer' however there is a device called 'apple mobile device USB driver' in the Devices & Printers directory. I've loaded, refreshed, reset, uninstalled and re-installed every driver I can think of. I've even tried going back to itunes v9 but I keep getting an error sying ITunes Library.itl is a newer file which stops the install.
With the ipod connected the ipod displays the 'connected - eject before disconnecting' message. Battery charging via the cable is working & I've tried different USB ports & cables. I've even reset the ipod 2 by pressing and holding the Play/Pause and Menu buttons simultaneously until the Apple/iPod logo appears.
So, bhas anyone any serious help to offer before I finally lose my temper with this current state of affairs?

I thought the next step was to try it on another computer. still the same..
so I tried it with a diffrent operating system-Still did the same.
I think I have a bad ipod. back to the store it goes

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