Yeah, basically you cant.
You cant connect your iPod to your PC and continue listening to the song on it while you are updating the music. PC or Mac. Doesnt matter.
What you can do is connect it to your PC, play a song, and then update.
This is really all there is to it.
Another problem with the iPod right now is the Okay to disconnect screen. For my 3rd gen, I cant have it docked and unmounted to charge and play music through headphones cause of this. I think its been updated in the newer ones though. Not sure.