Why does iPod 3G show exclamation mark / folder icon after CF upgrade?
I think the issue may have been an incomplete "update" process via FireWire on iTunes. I received error messages like:


The iPod "Josh's iPod" cannot be synced. The required file is locked.
The iPod "Josh's iPod" cannot be updated because it contains files that are in use by another application.


Ultimately, I found that the /Music/iTunes/ folder on this Mac had permissions that were causing these errors. The folder (and some files inside) was set to "Read &amp; Write" for the user, but "No Access" for the group or the world. I changed the permissions for group and world to "Read only".

After that I was able to successfully update/restore the iPod, and now it works but with the same quirks described in the blog post I cited above.