I'm in a similar situation, except I'm getting error -53. From what I gather, it's an iPod internal hard drive error, for which the only solution is to replace the hard drive (or the entire iPod). It's unbelievably frustrating, especially as I'm just out of warranty, and the last thing I want to do is line Apple's pockets with more money as I'm currently stuck with a very expensive, 2 year old paperweight.
I've already had a replacement iPod during warranty period; different issue that time though. I think the moral to this story is: don't buy iPods! I'll certainly be investing in an Archos when I've gathered the pennies.
Sorry I can't help you more.