Chosen Solution
3yr old iPod. Boots up and plays fine. Sound drops out and much static heard. Can restore sound by squeezing right lower case. Sound works great while squeezing case. When releasing squeeze, music becomes statically then quits. Display shows song still playing but no output. Can reproduce symptoms both with headphones or with dock. I’ve opened case and see nothing unusual.
Here’s a thread to Apple’s discussion of this problem: http://discussions.apple.com/thread.jspa…
Sounds like a bad ground, check that the motherboard’s ground straps are all in place.