You always could put any files on it. I have a first-gen 10GB unit that allows this. It is shown as a removable drive in the Windows Explorer as soon as it is plugged in.
as a little support to CorporateRecreation, he's right about starting at apple.com, 3 clicks away and you get to here, which has the paragraph:
iPod can double as a FireWire or USB 2.0* hard drive for your computer. This allows you to transfer files and applications from your computer to the iPod and take them with you wherever you go. iPod is smart enough to keep your data files separate from your music collection so that they will not be accidentally erased when you are updating your music.
I remember reading that when they first came out, people were walking into CompUSA and loading up Photoshop (among other things) on their iPods from the display computers.
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