You can sort of do this.
You can't make a new account for your daughter and then move existing purchases to be owned by your her new account. You can use those purchases on her iPod though.
If she already has her own computer account and itunes install just move over to a new iTunes account and make new purchases there. Change your password and move on. She will no longer be able to buy with your account. You may need to log in every so often so she can get updates of the apps that were purchased by your account but otherwise things will work fine.
If you have to split her a new iTunes account out of your existing account it's a bit more complex. There are a number of ways you can pull this off; here's how I would pull this off.
- Make a computer account for your daughter.
- Make a new Apple account for your daughter.
- Change your password.
- Authorize this new iTunes with your ID. It's under Store->Authorize This Computer... This lets her use content you've purchased with out logging in as you.
- Use Home Sharing to move your old purchases to the new iTunes.
- Sync her iPhone over to this new iCloud account.
At this point you can remove the purchases for her from your account. They are in her account and will install and play on her iPhone. She doesn't have for password and those apps you've already purchased for her are still owned by you. They won't update without your password. You'll have to log in for her every so often so that things can update. It'll prompt both on the phone and on the computer when it needs it.
I have an alternative take on this problem:
I have just bought a Classic 160 Gb at Amazon few weeks ago and I have been facing the same issues as you.
I do not use Mac OS X, nor iTunes to sync. I run Linux and I use Media Monkey on a Windows VirtualBox Machine.
During the past two weeks I have tried everything that I could find. iTunes have not even been able to read my entire collection (strange, right?)
My findings
I have just restored the iPod firmware a few minutes ago. Started MediaMonkey and sync'd 10 songs from an ordinary random artist. Disconnected and the songs were there, nice. So the iPod is actually working. So far, so good, I have figured that out before.
However, in the meantime, while I was checking my library, I recalled that I have some songs from Japanese bands with Japanese characters in their names. Historically, this would be very error prone. So I did gave it a try, and sync'd 64 songs from that band. Disconnected the iPod and the songs were all gone.
So apparently the 2.0.4 firmware does not handle these characters very well. Check your library, make smaller tests. I am about to restore the iPod again and will try to sync some more files with normal ASCII characters. Will update you.
My old, now dead (waiting for a new disk), iPod, running 1.0.2 was able to hold those files nicely.
Best Answer
I don't think that you can override the car's interface when using the 30-pin connector with that iPod.
If you use an aux cable (1/8" male to 1/8" male) to the headphone port you will be able to control the iPod using it's native interface, but you will lose the charging capability. To regain charging you could use a 12-volt power adaptor, but this is two cables instead of the single cable you are currently using.