With the imac you have the chance to partition the hd. (To divide it up into sort of individual mini hd's) We split ours into OSX, OS9, Programmes, Folders and a few others ... it means that you can empty one mini hd and start again without changing the others. Plus if you transfer inportant bits into another mini hd before you empty it you are then able to keep them.
I suspect that you have created a mini hd called ipod and I would suggest that you try removing it but first I would do a full backup onto CD.
Good Luck!