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Please help me!!   Error: Ipod cannot be updated because it contains files

Time:October 11
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I keep on getting the error: "Ipod cannot be updated because it contains files that are use by another application" I try to restore and I get "Ipod cannot be restored because it contains files that are use by another application." I have Itunes 7.0 and the Ipod video is version 1.1.2 and I am trying to update to version 1.2.
I would be most grateful to have your help....:-)
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I am not too sure with iTunes 7, for iTunes 6 I solved in these ways
http://docs.info.apple.com/article.html?artnum=93764
Turn off all anti-virus software
Reboot your PC and Reset your iPod
Reconnect ipod back with your PC