**(The fix it at the bottom!)**
I had the same problem with my brand new 3 day old 15 GB iPod.
I was copying contacts and calendar fiels (vcard,vcal) from Palm Desktop. (I use Windows XP with USB 2.0). Anyway, when I clicked the "safely remove hardware icon" in the system tray, it would not let me eject the iPod (which is obviously enabled as an external hard disk). It gave me a message saying: "the generic volume for this device is in use, try to un-mount later". I then went into iTunes 4.5 to try to eject it thinking that this would work. Instead, I got another message saying: "iPod can't be ejected right now because it is use files that another open program is accessing." So i figured this was because of Palm Desktop, I closed Palm Desktop, and then it un-mounted correctly. Now, I went into the iPod extras menu to see the changes. As soon as I went into Contacts, the screen said: Contacts 17 loaded. Then the hdd started to spin very loudly and it would not stop. Also the battery was draining fast, and the back was getting very hot. It did this while I listened to music, did anything else with it, and when I charged it. I knew something was wrong. So I went to ipodlounge.com and apple.com to read the ###'s... nothing. So I did a reset until I saw the Appel logo... nothing. Then for the fix.
-----------------
**THE FIX:**
-----------------
1. Make SURE you back up everything on your iPod into iTunes, and that your music library is on your computer.
2. Go to Apple.com and download the latest firmware update: 2004-4-28 (version 2.2). Download the updater application for either Mac or Windows.
3. If your iPod already has v.2.2 then thats ok, connect your iPod to your PC or Mac. If iTunes is set to automatically open and update iPod, let it do so.
4. After the update is complete, close iTunes, but leave your iPod connected.
5. Locate the iPod Updater Application (v.2.2) on your computer. Open it and click Restore. This will delete everything off of your iPod and return it to the factory defualt when you bought it.
6. Once this update installs on your iPod, the next time you turn it on, no more hot battery, no hard drive noise. Its like new. All you have to do is just put your music on it and you are ready to go. Enjoy!
----------------------