Update: I had abandoned the idea of repairing this iPod, I took it to a technician which soldered the Dock Connector, but the result was the same and even worse as the iPod didn’t charge when connected to the FW Adapter. As of last month, I purchased an used iPod Color U2 which had a fully working hard drive, after restoring it to factory settings on my Mac I got the same folder screen which the 3rd gen showed me. So after many hours of frustration and forethought, I decided to format the Hard Drive with Windows… Voila! I formatted both iPod Photo and the 3rd gen hard drive with a Windows and it solved the problem, I can now use them and sync the music on my mac. I guess it has something to do with the Read/Write permissions on my Mac or the quantity of iPods that I have synced to my mac (I’m a collector). I hope this helps some of you that are having trouble with the folder with exclamation mark and a working hard drive!