I just fixed this problem in a live chat few days ago.
You need to open device manager.
right click my computer, select manage, on the left side find device manager.
Find the
ipod from the list, click on
"update driver",
don't look
online,
Then select install from list.
then

You should find 2 or more drivers in this part, select the
ipod USB
driver name may be different, just don't select the still camera that
it is now
using.
if it still installs the still camera driver for it
open up search
type in
usbaapl note where that driver is stored.
for
example at c:\program files\apple\itunes\ (I just made that up its
probably in another folder
that's why we are Searching for it with the
search tool)
Then go to device manager select the
ipod, update
driver, manually(as above), have disk - go to the address where the
usbaapl is stored and click ok.
it should find the driver, continue, it
should install the driver, and you are done.
Thanks,
Ekse
Comment by Ekse, posted on Aug 27, 2008
if it still installs the still camera driver for it
open up search
type in
usbaapl
note where that driver is stored.
for example at c:\program files\apple\itunes\ (I just made that up its probably in another folder thats why we are Searching for it with the search tool)
Then go to device manager select the ipod, update driver, manually(as above), have disk - go to the address where the usbaapl is stored and click ok it should find the driver, continue, it should install the driver, and you are done.
Thanks,
Ekse