I don't know if anyone was having the same problem I was..but here goes.
I connected my Ipod and downloaded the software, much like you did in following the instructions. However, I will admit I got a little lazy on reading it all the way through. ITunes told me that it wasn't safe to disconnect, as there was another application sharing music with it (ITunes and Warez P2P). And being the idiot that I am..I disconnected it anyway.
I was pissed when nothing seemed to work on this little gadget..wondering what I had done wrong, I did what any normal person would do. I Googled the problem and found this site.
Eventually I turned up at Apple's Ipod Help Center thingy online. Anyway, I finally got it to work, it said that if the IPod was disconnecting (whoops) you need to download the latest IPod software, and open it. It won't open on its own if you have Windows, so go to the Start Menu and open it yourself. Anyway, it should automatically update your Ipod's software. From there click Restore to restore your Ipod's original settings. And Voila! your Ipod should be playing music now..mine does. =)
Also, I was wondering why the battery light wouldn't come on after 5 hours of charging, turns out that you can only check the battery when your IPod is off. Obviously I would have known this if I had read the manual throughly. So, if you're a lazy sloth like myself, here is how I fixed my problem, and I hope it will help you too.
So, we learned to always make sure you have the latest software for Ipod..you must click the Ipod Software manually through your Start Menu...You can only check the battery when Ipod is off...You Should Read Directions (and not be lazy, like myself)...anddd there was another one..but I forgot?