I am terribly sorry for a mistake I made in the previous post. I listed the audio channels backwards (white out is right in and yellow out is left in). I was using an old test cable that was actually wired backwards itself. However, I was able to get my hands on an accurate continuity checker and a friend's Apple video cable and found my mistake. So I had everything else correct. Anyway, I went back to my scrap cables and found that if I grounded the video cable to the ipod's outside metal case, and grounded the audio to the positive red output, then everything was clear. Obviously a grounding issue that I don't know how to correct.
I also noticed that I get a distinct background sound, most likely out of phase, when I only connect the left and right positive (+) input channels to the yellow and white positive output channels (basically just remove ground). For example, when watching a movie, I would remove the ground signal and lose all voices but still hear the exact background noises and effects, yet the two stereo channels sounded out of phase with each other. This does not make any sense and obviously is a grounding issue again. If the ground is removed, there should be NO sound. One small detail that I don't think matters but I think is worth mentioning is the fact that Apple's cable has a plastic non-conductive sleeve at the extreme base of the plug (which is the video output) that physically hits the outside of the ipod whereas the camcorder a/v cable is all metal including the base, which is the same metal as the last sleeve (supposed to be ground for camcorders but ipod uses this as "video" output). I don't think this is the grounding issue because I tried to pull the cable just slightly out of the socket to make sure it was not in contact with the ipod's case and nothing different happened.