I have never purchased a song from iTunes. My iPod consists entirely of mine and my wifes CD collection. Which, having worked at a radio station many years ago, is freaking huge.
Okay, I’m not good at this html stuff on freerepublic, but here goes:
http://support.apple.com/kb/HT1329
this is the way we transferred my daughter’s itunes library from my computer to hers (I got an Iphone and wanted her library off mine). It took awhile, but follow the instructions. Sounds like Itunes won’t recognize your music unless you use your Ipod as a hard drive.