I think it is just an Audi AMI issue with the ipod classic. Audio specialist said the AMI struggles reading bulk data and suspects that it chokes on the 160 GB, but he can't figure out why it worked for 5 months.
I have the same issue with A8 2011 - recently bought gently used - it worked fine for the first month and a half, then literally was on a 2 day drive from Chicago to Denver and it just stopped.
Sometimes this is enough to get things working again.
The next step is that I am going to re-format my i Pod and reload my music/content (or at least some of the music/content) and see if that fixes the problem. I have a 2009 Audi A4 and I am on my 3rd AMI cable which is about to get replaced with a 4th cable. Different symptons each time (no bass, no sound, stays "connecting", etc...). I am also having an issue where the song playing is not what is being displayed on the Audi screen. Try getting the cable replace and see if fixes the issue. Now, not only won't it recognize my 160GB i Pod Classic but it also fried my i Pod. This is my second A4 and the last one had similar issues. The system "reloads" about every 15 seconds and songs are interrupted all the time. My 160GB ipod classic worked fine in '13 Q7 for 5 months and no the AMI will not recognize it.
You have to understand that the i Pod functions perfectly both stand-alone and while connected to my computer. And Apple still has their collective heads up their collective asses on this one.
I found this site while researching the same problem with my new i Pod touch and my 2008 A6 Avant.
(The only thing I did was buy a new 32GB i Pod Touch and plug it into the system in order to charge the battery.) The i Pod Classic works perfectly otherwise, both stand-alone and attached to my computer.
Apple is proving to be the biggest bunch of A-holes to try to deal with; Audi is hitting a dead end.