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Hold a flash light to the screen, if you can see the display still with the flashlight, its the back light on the LCD.This requires replacement. If you don't see anything at all, it is more likely to be the logic board on the unit. The logic board is an expensive part, and in most cases, isn't worth fixing.
The LCD is a relatively easy fix, but if your not an avid DIYer, it could be difficult. There are also a lot of stores that will repair this sort of thing for you, but when you tack on labor to this repair, you may as well get a second hand one that works.
The white glow with no picture means that either the ribbon cable connection between the logic board and the monitor has come lose or dirty contacts, or the LCD Controller (T-CON) board (part of the LCD panel is not getting 5v or 12v depend on LCD panel from the logic board or the LCD controller board has blown fuse, see pictures here for guide (note pin on the LCD board with arrow mark is pin 1 and is the incoming DC power supply line): http://s807.photobucket.com/albums/yy352/budm/LCD%20panel/?action=view¤t=DSCF0881.jpg
You may also want to look for bad caps (bulging top) on the logic board. There should be 5vdc feeding the logic board also.
Its definitely the logic board (motherboard) that has gone bad. Its not the actual screen nor LCD. Its the logic board. You could replace the screen with a new onje and the backlight still will not work. Nano's are known for this but of course apple won't admit to putting out a piece of **** logic board in all of the nano's or they would have to recall 10 million of them! So, they just play stupid and say your nano is out of warranty but we'll give you a 10% trade in discount. What a joke! I know this because i used to work for Apple ;-) They screw customers left and right to keep their profits up.
A white screen is typically caused by a short in the logic board that is causing the Video Output to incorrectly display on your LCD.
You can replace the LCD in the unit, but more than likely this will only fix the problem for a short amount of time.
I have repaired 100's of iPods with this problem and replacing the LCD does not usually fix the issue.
I would suggest selling the unit AS IS for parts or repair on eBay or Craigslist.
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That means that the inverter board for the LCD has gone out or there is a bad connection internally and it is not getting the signal to display the info. Your best bet is to see how much Apple wants to fix it. If it is too much I would say time for a new one. Fry's Electronics is selling the new 8GB Nano for somewhere between 139 and 159. That is their regular price.
I have had this problem recently myself and would like you to know that it is possible to fix. The white screen error or otherwise known as "white screen of death" is caused by the lcd color screen on the ipod itself. That is why its functions still work but the screen does not. Once you replace the color screen it will be as good as new.
Normally I'd think it was the headphone socket, however if your LCD is leaking and you are having problems with with volume I think your ipod has suffered an impact which has damaged the logic board.
The bad news is logic boards, while easy to source, are quite an expensive part. If you are not bothered about replacing your LCD I would suggest buy an ipod off ebay with a broken screen and take the logic board out of that, it should work out quite a bit cheaper and of course when you will have a hard drive and a casing left over from the scrap ipod to resell.
To open your ipod use two small flat bladed screwdrivers inserted between the metal shell and the plastic top of the ipod and gently prise apart. Once inside, all the major components are connected with ribbon cables, there is no soldering involved replacing a logic board. Some of these cables are quite fiddly though and the connectors are easy to damage so if you are not confident doing this I'd suggest getting it repaired by a pro.
It might be the LCD screen. You can take it in to an Apple store and see if they can replace it. Or, you can take the riskier option and try to change the screen yourself (not recommended). It doesn't sound like you'll be able to fix it without taking it in.