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I'd say your best option really would be to get a new computer, the 2007 Mac Books were a tempermental bunch to put it mildly, but if you're on a bit of a budget, you'd need at least another 512MB of RAM. No younger than 2007, but quite possibly an 06 model.
I have just bought a new Ipod nano but when I connect it to my computer, itunes won't recognise it because the ipod requires itunes version 10.0 or later.
You're of course free to completely disregard that advice and push your luck as much as you want, I'd just wait until you're out of a region that is known for counterfeit goods.
Hopefully you didn't buy that i Pod in Singapore, because people in that region have been known to go dumpster diving at factories and sell units that didn't pass quality testing for one reason or another that they "liberated" from the dumpster.
Pressed at the same facility from the same master image, just put into different boxes.
But, if someone thinks there's a difference, then maybe they'd be interested in this bridge I have for sale. I even recently had an exterminator in to clear out all the trolls living under it!
Have a system with almost identical specs as yours in my "waiting on parts" collection at work. If the OP were to call Apple, even though that system is long out of warranty, they should be able to be able to have someone tell them how much RAM it will accept.