What type of computer & OS are you using? Which 'exact' version of iTunes do you have on your iPod (I think I heard there's an update for it)? Have you tried moving your mp3's to another location out of the LW Dwnlds folder 1st? Is it only the mp3's in your LW folder it won't recognise/access the folder? How about other mp3's you have on your computer? Have you checked with Apple's website to see if there's any problems like this listed & solutions for it?
Check this out:
http://www.apple.com/support/downloads/ipodupdater.html
This update is less than 2 weeks old.