I posted this on the Apple Discussion boards and haven't received any response so far.

I upgraded iTunes to 7.4.3.1 on my Windows computer and it is giving me this message when I connect my 2nd gen shuffle. It didn't give me this message before I upgraded.

"The iPod "Share" cannot be used with iTunes because it is not formatted properly.

To format this iPod so that it can be used with iTunes, go to the Summary tab in iPod preferences and click Restore."

I hit restore. iTunes appears to restore the shuffle but then gives me the same message.

I can restore the same shuffle at home on my iMac without any problems. Like I said, this only started after upgrading to the lastest version of iTunes.