The error is “windows security enter network password”, no matter what password you enter you will not be able to connect to your Windows XP machine from your Windows 7 PC.
The way that I fixed the problem was to open the local security settings by going to the run box and typing “secpol.msc” then going to local policies, security options, then network security: LAN Manager authentication level, you will select the second one on the drop-down menu with NTLMv2, Send LM & NTLM – use NTLMv2 session security if negotiated. This is what fixed the problem for me.
Your iPod software can be out of date. All you have to do is to select restore iPod to factory defaults either in the iTunes program or on the iPod itself. This will restore the iPod to the original factory condition. A word of caution is that you will loose all of your songs as they will be erased. If your iPod is still not syncing with iTunes on your PC or mac, then I suggest rebooting both the PC and iPod with the usb plug disconnected. Once the PC is back on and completely booted up, plug in the usb cord on the iPod and iTunes should pop up and you should be able to sync your iPod to iTunes Try to reboot the iPod and PC a few times if necessary, it should work.