chanan, It seems this happens a lot. Here is my answer to the same question from a different person "The first step you should do is to disassemble your iPod. Use [guide|3603|this guide] to help you out. After that clean the iPod thouroughly by following this [http://www.ifixit.com/Wiki/Electronics_Water_Damage|general guide.] You a high grade isopropyl alcohol. Once you are sure the logic board, connectors (do not forget the dock connector), and cables are clean '''replace the battery'''. You can get it at places [http://www.amazon.com/GTMax-Standard-Battery-tools-Generation/dp/B0062ILSKA|like this.] Once you have all this accomplished, reevaluate for any residual (if any ) damage. In your case, you may have to replace the LCD as well. Follow [guide|3602|this guide] for that. Remember that this model is a PITA to work on but not impossible to fix. Hope this helps, good Luck.
[http://www.ifixit.com/Answers/View/83531/Can+I+get+my+machine+washed+nano+to+work+like+new#answer83554|here] and [http://www.ifixit.com/Answers/View/82646/My+iPod+went+through+the+washing+machine!+What+should+I+do|here] and one more [http://www.ifixit.com/Answers/View/81120/iPod+Nano+went+through+washing+machine%2C+help|here]