Everyone,
FYI....
The iPod is seen by your PC as a generic removable drive. You can store any files you want on it, but for iPod to recognize and play the files the files must be of certain filetypes (e.g. mp3, aac, aa, etc) and the information about the files must be stored in a precise way in a database file which is stored on iPod. This database file is the key to your iPod functioning as a portable audio player, as opposed to a large removable storage device that does not play files.
This database file is not officially documented, is very complicated, and its implementation varies from program to program which makes its creation and management difficult, but not impossible.
When you have files on the player but they are not 'recognized' by the player, almost certainly the database file has been written incorrectly. The best solution is to reinitialize your player and start from a clean slate (in regards to the database). Alternately, the 'Rebuild database from iPod' option allows a recreation of the database with the files on the iPod and will work in most cases, but there are complications that can arise if other applications have accessed the iPod database of if unexpected events have placed files on iPod in unanticipated locations.
Steve