In most cases, the connected iPod needs to be restored. Follow the steps in one of the following articles to restore your iPod:

Restoring iPod to factory settings
Restoring iPod shuffle to factory settings

If you've restored your iPod and the message described above re-appears, the iPod drive letter may need to be reassigned. To assign a different drive letter follow the steps for changing the Drive Letter

Note: If you're not able to restore your iPod, refer to iPod displays "Use iTunes to restore" message for additional troubleshooting steps.