To help explain what the numbers mean here is an extract from the Wikipedia S.M.A.R.T. article:
Reallocated Sectors Count (Reallocs):
Count of reallocated sectors. When the hard drive finds a read/write/verification error, it marks that sector as "reallocated" and transfers data to a special reserved area (spare area). This process is also known as remapping, and reallocated sectors are called "remaps". The raw value normally represents a count of the bad sectors that have been found and remapped. Thus, the higher the attribute value, the more sectors the drive has had to reallocate. This allows a drive with bad sectors to continue operation; however, a drive which has had any reallocations at all is significantly more likely to fail in the near future. While primarily used as a metric of the life expectancy of the drive, this number also affects performance. As the count of reallocated sectors increases, the read/write speed tends to become worse because the drive head is forced to seek to the reserved area whenever a remap is accessed. If sequential access speed is critical, the remapped sectors can be manually marked as bad blocks in the file system in order to prevent their use.
Pending Sector Count:
Count of "unstable" sectors (waiting to be remapped, because of unrecoverable read errors). If an unstable sector is subsequently read successfully, the sector is remapped and this value is decreased. Read errors on a sector will not remap the sector immediately (since the correct value cannot be read and so the value to remap is not known, and also it might become readable later); instead, the drive firmware remembers that the sector needs to be remapped, and will remap it the next time it's written. However some drives will not immediately remap such sectors when written; instead the drive will first attempt to write to the problem sector and if the write operation is successful then the sector will be marked good (in this case, the "Reallocation Event Count" (0xC4) will not be increased). This is a serious shortcoming, for if such a drive contains marginal sectors that consistently fail only after some time has passed following a successful write operation, then the drive will never remap these problem sectors.
Large numbers of Reallocs or Pending Sectors would suggest your drive is failing and that you may need to repair or replace your iPod.
Pending Sector Count is ok but your
Reallocated Sectors Count is extremely high. Usually a sector holds 512 bytes. The 16376 reallocs mean that already 8 MB have been reallocated.
My 4 year old iPod Classic still has only 0 reallocs and 0 pending sectors.
Though i haven't been able to find any information about the number of sparse sectors on HDDs, I doubt that your iPod Classic has any more left. Probably you have some more (irreplaceable) bad blocks which renders your iPod unusable.