Copying music from iPod to OneDrive for accessing via iTunes
There is really no reason why this would not work. Directing the iTunes music library to another location.

On macOS in iTunes Preferences under advanced there is a button to select the iTunes library (music and related files) location, which can be, pretty much, anywhere. I believe that it works the same way in Windows.

You'll want to copy the iTunes folder that held your music to your OneDrive folder and place the music from the iPod in the appropriate folder within. Depending on how careful you are and/or how lost iTunes is you may have to find a number of the missing songs manually. But iTunes should recognize at least some of the missing music and ask you if you want to re-add it to the library automatically.