Here’s what happened to me:

I’m ready to head out for a run and I’ve just updated to iTunes 7.7 and the iPod shuffle (2nd generation) is loaded up with new and exciting stuff to take my mind away from the run.I’m halfway out the door and the thing doesn’t work.

I start with the usual “5 – Step” method of troubleshooting an iPod and nothing is working still (I think I made it to step 3 and just did the run without the iPod).

When I got back, I plugged in the iPod again and noticed something odd: a Podcast playlist now appeared below my iPod shuffle drive. Ah! The answer: delete it and it will work.

Here’s simple steps to cure the problem if your iPod shuffle won’t play and does that green-yellow-green-yellow-green-yellow blinking thing:

1. Plug in iPod shuffle (2nd generation).
2. You’ll notice the “Podcasts” play list under your iPod volume.
3. Delete the “Podcasts” playlist.
4. ITunes will re-sync
5. Unmount the iPod Shuffle and everything should be fine.

For some reason (perhaps related to the recent update to the iPhone and iPod Touch), iTunes 7.7 will add the podcast playlist. Luckily, you really don’t have to do the 5 steps to iPod restoration; you just need to delete one thing, and you’re back on the road with your iPod shuffle.