Note: Be sure to read my Update to this post

When trying to update my shiny new iPod via iTunes on Windows XP, I kept getting the following error:
Delayed Write Failed
Windows was unable to save all the data for the file x. The data has been lost. This error may be caused by a failure of your computer hardware or network connection. Please try to save this file elsewhere.

The iPod would lockup and I’d have to reset it to get it to work again. After some research I found the cause: Write Caching was disabled on my hard disks. Because iTunes tries to push as much data as possible as quickly as possible, Windows was unable to keep up, resulting in the error.

To enable Write Caching on your hard disks:

Start > Control Panel > System > Device Manager > Disk Drives > Properties > Policies > Enable Disk Caching

Note that this option was unavailable to me (grayed out), and after some research I realized it was because I had the Intel Application Accelerator installed, which turns OFF write caching and prevents you from enabling it. So after a quick uninstall of Intel Application Accelerator and a quick reboot, I was able to enable Write Caching on my hard disks, and now the error is gone and my iPod is updating as expected.