I thought I finally found some sw that could sync/copy files to the ipod and detect incompatible files and convert them but there seems to be a bug without a workaround.
12.0.49 Media Jukebox
Ipod Nano 2nd Gen 3.7G free
Playlist with 315 files 7.4GB
The intent is to copy the playlist (files) to the ipod during which it will convert to mp3 format thereby decreasing the file size such that the 315 files will fit on the device.
The message is "Transfer 305 Files - 8.0 G Over capacity" while is also says "Playlist with 315 files 7.4GB"
[You have attempted to transfer 8.0 G more media than can fit on the device.
Would you like files that don't fit to be automatically removed so that the transfer can continue?] -- There is a workaround, where you answer yes and then pick up where is left off. In my case it stops at about 90 files, so I then select files 90-180, but this is clearly a bug that impedes ease of use.
I found a bug fix listed in another product where a similar error happened while burning a CD.