When installing 2.1 on a 3rd gen. 10GB iPod from a 12" PowerBook (using 10.2.8), I got an error message from the installer. Something to the effect of "The iPod is connected, but not mounted." I thought that odd, disconnected the iPod with intentions to immediately reconnect it... And the new firmware was being loaded; I had the screen with the Apple and the progress bar. No problems since.