You may have a loose harddrive connector inside your iPod. Have you attempted any repairs on your iPod? If so the connector might be loose; if not, it might be that your harddrive has died and needs replacing.

What model of replacement hard drive did you get? Not all hard drives are compatible with all models of iPods. http://www.rapidrepair.com/phpbb/viewtop...

You may have a drive that is *INCOMPATIBLE* with the iPod video 5th generation. The 80GB drive "MK8010GAH", that is usually found in an iPod video "5.5" generation, is actually not compatible with the logic board in the 5th generation iPod video (neither the 60GB nor the 30GB models). This table might help you locate a compatible hard drive for your iPod. http://www.rapidrepair.com/phpbb/viewtop... I had exactly the same issue, when I replaced my 60GB drive with an alternative and discovered this drive was not compatible with the iPod 5th generation. I got the same 'restore in itunes' loop over and over. Essentially, the iPod firmware cannot write to the hard drive, so the restore doesn't work.