I just tried this as my DB got whacked by ephPOD. I get the disk mode as you mentioned by iTunes tells me it is corrupt to restore the iPod to factory settings.
the first post of this thread saved me probably $200-$300. I didn't know what happened and I had to call apple, and they didn't know what to do. They should read this forum!
-Bkrasner
didnt work for me 
didn't work for me either.
also, is there a process to get the unit back from "disk mode"?
I cannot seem to get the unit out OFF this mode.
Do I toggle the main power switch??
thanks for any suggestions. Am trying to recover from using ephPod.
My whole LIBRARY of songs disappeared from my unit. ( 3 weeks of hard work!)
Am using Win XP Pro SP1 and a 4th G 20GB iPod.
that happen to me today
One of those guys from the Apple store told me that to save the songs, you'll need to
plug in your ipod and go to My Computer>the iPod drive>iPod Control>Music
and in that Music folder it's where all your data/music are.
Next thing to do is move those folders in to your computer, once it's done
download the updater and restore back to factory setting.
Last thing you need to do is move all those music folders/files back in to your iPod.
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I recently found that my iPod DB was corrupted after using ephPod to manage files. I searched this forum and found that others had this problem also. However, the best advice I found here was to restore factory settings. Since this would have meant losing all my music, this was not an acceptable solution for me.
I tried a number of ideas, but here is what finally worked:
1. Set the iPod to disk mode. Toggle the hold switch on and then off. Hold down the Menu and Select buttons simultaneously for several seconds until the Apple logo appears. Then immediately hold down the Select and Play/Pause buttons simultaneously for several seconds. A checkmark will appear at the center of the screen indicating that your iPod is now in disk mode. (This procedure is somewhat different for different models. Refer to your model's instructions.)
2. Start iTunes.
3. Plug the iPod into your computer.
4. iTunes will hopefully recognize the iPod and start automatically rebuilding the database. This may take a few hours, but don't cancel the process. If it works for you as it did for me, you will not lose a single track!
I hope this helps somebody here repair their iPod without the heartbreak of losing music.