Problem updating iPod software (version 1.2)

I'm trying to update my video iPod (30GB) with the latest software (version 1.2) through iTunes, but I get the following message:
"The iPod cannot be updated because it contains files that are in use by another application."
I've tried restarting the computer and resetting the IPod, but still get this message.
  Windows XP  
  Windows XP  
  Windows XP  

I had the same problem (before I bought my Mac). Apple hides the fix pretty well. It can be found here: http://docs.info.apple.com/article.html?artnum=304468. Hope this works for you!

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