
Clicking "Erase And Sync" will replace the contents of your iPod with whatever is in your iTunes Library - if your Library is empty, you'll have an empty iPod. Once you've got your music copied back to your computer, you can then click Erase and Sync and let iTunes sync to the iPod.
You must respond to this warning - leaving this window open will cause Music Rescue's attempts to add your music back to your iTunes Library fail.