iTunes prompts to restore iPod nano while mounted, but backup fails

iTunes wants to restore iPod Nano.

As you can see in the screen shots, iPod Nano is mounted to the desktop.

Two dialogue boxes appear for said device. One from the OS, another from iTunes. Can not seem to back-up device. Would like not to restore and reload music! Have tried Disk Utility, No Joy! What gives?

Thank you for your time, James

[Edited by Moderator]

Original Title: itunes ipod nano