I had this problem before and it fucking sucked. I did figure it out through Google searches, but I can't find the page anymore. Here is what I did though:
- plug the ipod into your computer
- right click the "My Computer" icon on your desktop and go to "Manage"
- under "Storage" click on "Disk Management"
- besides your "C" drive, there should be another drive showing up without a letter; right click on it and click "Change Drive Letter and Paths"
- assign this new drive any letter that is available
- from here you can right click on this newly assigned drive and go to "Explore" and delete shit, or you can re-format it
I am running Windows XP Professional SP2 BTW.