ALL CAPS messages are against forum rules. Are you sure that the videos are in the correct format for the iPod? Where did you get these videos from?
Well, iTunes isn't confusing your iPod Nano and Video, iTunes just doesn't work that way, one iTunes can be connected to about as many different kinds of iPods as you want. What is probably the problem is you don't have the 'Update Videos' tab checked off. Plug your iPod into your computer and go to Edit->Prefrences-> and if I'm not mistaken it's under the Advanced tab, under the 'Videos' tab in that section. But if I'm wrong which is possible its just in 'Prefrences' somewhere, maybe under 'iPod'
Yes, this could be one problem. The other problem could be that you need to convert the videos to the iPod's Mpeg-4 format. If that is the case, please post back and we will assist you further in that.