First of all, an iPod should be detected by Windows as a flash drive/removable media (not 100% on the Shuffle, but my nano is). That means that in addition to a music player, it can fold data files. That said, the iPod and iTunes experience handles music differently than say an iRiver or Creative player which basically is a drag and drop audio player. You can't do that with an iPod... the music won't play... at least through the iPod management. If you drag mp3 files to your iPod as if it were a flash drive, the VR3 should see them. I suspect you have a faulty cable. It's a mini-stero plug on both ends that you could replace at a Radio Shack.
You may have some luck with your iPod related questions @ Apple Discussions
. I frequent that group as well.