I had a car which occasionally showed the USB device not supported message, but if I started the iPod playing and then connected it to the car, the music would play through the car, regardless of the not supported message. What I could not do was control the iPod from the car's controls and there's probably no way around that*.
If the above suggestion does not work, then if the car has an AUX socket, you could plug the iPod into that byu using a headphone to AUX socket lead (a 3.5 to 3.5mm lead). In this configuration, the volume control on the iPod will also affect how loud the music is through the car's system.
* By the way, if I remember correctly, the operating system on the iPod (2.0.5) is up to date. There will not be any updates for it (and even if I'm mistaken, any update will not change the situation you face).
If neither of the above solutions works, I think you may simply be out of luck as the Classic is very old compared to the cars.