I have found a solution to my problem
I uninstalled iTunes and quicktime and then installed iTunes 6 instead of version 7. Also what I did was rename my iTunes folder in My Music which is basically the same as deleting it. Sure it has its drawbacks such as no coverflow thingy but things like that aren't as big as a priority as getting my iPod recognised my iTunes. If I update back to 7.1.1 my iPod may work, I don't know, but last time I done that is when all the problems started so I will stay with iTunes 6 for the time being
I uninstalled iTunes and quicktime and then installed iTunes 6 instead of version 7. Also what I did was rename my iTunes folder in My Music which is basically the same as deleting it. Sure it has its drawbacks such as no coverflow thingy but things like that aren't as big as a priority as getting my iPod recognised my iTunes. If I update back to 7.1.1 my iPod may work, I don't know, but last time I done that is when all the problems started so I will stay with iTunes 6 for the time beingHey, that's great news. If I get a minute today I'll have a go at that; not sure where I'm going to get the old version from but I'm sure that's no big problem, I suppose it may be available on the roll-back of XP even, fingers crossed. Thank's for letting us know. Have you made crapple software aware of you findings, might be a good idea then they can fix version 7 for all of us?
I would of posted the link to iTunes 6 before but the site was down but thankfully its back up again, here you go: http://www.ipodwizard.net/iTunes/iTunesSetup_6.0.5_WIN.exe 
I haven't posted my sent my solution to apple yet but might do if I can be bothered.
I haven't posted my sent my solution to apple yet but might do if I can be bothered.