Symptom
iPod doesn't appear in the iTunes Source list even though you've connected it to the computer. This occurs when iTunes 2 is installed on a volume that is not used as the startup disk. If iPod displays this symptom, and iTunes is installed on the startup disk, see technical document 60950: "
iPod: Not Recognized in iTunes and/or Finder".
Solution
Reinstall iTunes 2 so that it is in the Applications folder on the startup disk. iTunes 2 cannot recognize iPod if it is installed on a partition or volume other than the startup disk. Later versions of iTunes will only install on a startup volume and are not affected.