Well, here's an update.
A couple hours after I called apple, I checked my iPod and it was very warm, almost as if the battery was overheating. I packaged it back up preparing for the dispatch envelope ready to send back to apple.
Well, out of curiosity, I took the iPod out again and it was completely discharged, however it was functional when I hooked it up to the wall charger. Should I still send it back to apple?