This from Apple "If iPod shuffle has an error, the front status light will blink orange and green when you press any button. If you see this, try turning off iPod shuffle, waiting a few seconds, and then turning it back on. If you still see the front status light blink orange and green, it could indicate that you have no songs on your iPod shuffle to play. Use iTunes to add songs to iPod shuffle and make sure the songs you are adding are compatible.
If you still see a blinking orange and green light, use iTunes to Restore iPod shuffle, and then use iTunes to add songs. If you still see orange and green, your iPod shuffle may need service."
It seems that the Mac solution to this is to:
1. as with the PC go to your ipod setttings and enable disk use
2. Quit Itunes and open Disk utility
3. Click on your ipod and reformat(from the ERASE tab) to FAT32
4. Open up itunes and restore the ipod
and the PC is to use windows explorer to format the Ipod. Format as FAT and then afterwards start Itunes and use the reseting feature.
Hope this helps.