I went online immediately to find solutions.
Then somebody advised to do this after reset, hold down middle button and play button to switch to Disk mode. I tried it but it still didn't work.
I kept trying but nuthin' worked. Super crap! How can I survive without my freakin' music?!
The next morning, I tried again. This time, I did the following:
First, I reset the iPod without connecting it to my lappy.
Next, I held down middle button and rewind button. This gave me a new screen, reminiscent of DOS F8/BIOS days. I looked for Reset inside the Power menu.
Then, I reset again and plugged it to my lappy.
Voila! My iTunes finally recognized my flippin' iPod. Whew!!! Too bad, my mp3s are all gone. Next time, back up everything is the moral lesson here. Also, remember to disconnect your iPods properly. Wait for that OK sign.
So next time you get the same message, you know now how to solve the issue ;oP