i found the same problem with my sony mp3 player when connected to the stereo via usb. It is because the software used to put the songs on you ipod changes the file extensions of the songs so that they are not recognised as mp3s by the stereo.
I thinnk this is why there is an option on windows media player (if you use it to sync to mp3 player from your pc) not to convert the songs for copyright reasons.
I just eneded up buying a 2gb memory card and does the job fine.
sam
August 2010
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