The HDD connector usually unseats slightly and it stops working. Pop it open with a credit card and reseat it. A more dangerous way that sometimes gets it working again is to wait for it not to be spinning and give the edge a good smack against palm of your hand. This usually works to reset it the tiny bit it needs…

I’m sorry to hear that your iPod might be bricked. I haven’t worked on an iPod gen2 personally, but I repaired an iPod mini. The interface for the small hard drive in that is the same as compact flash, so it’s very easy to replace the storage with something more physically durable. Or at least it is easy to find the replacement part - I haven’t tried the whole process on your iPod.

Honestly I'm amazed yours lasted this long. I had a fourth-gen 40GB iPod back in The Day and it was easily the least-reliable Apple product I ever owned due to that internal 1.8" HDD. Mine was replaced five times under AppleCare.

When that eventually ran out and it died again (in 2009 IIRC), I swapped in a CompactFlash card using a cheap adapter from DealExtreme. Once you do that or an SD card mod (more popular these days), have iTunes restore the partitioning scheme and OS and it'll be good to go.

The mechanical drive has probably failed. If you put the iPod in a freezer bag and get it very cold, it may spin up long enough for you to make a backup. But make sure it is in a freezer bag or something otherwise airtight or the condensation will brick it worse. The cold shrinks the metal enough to mitigate the initial friction of the drive spinning up.

From there, you can mod it to work from a micro SD card.