I think he's saying.
1) Download the mp3s onto your ipod.
2) Play mp3s without connecting the ipod to the car.
3) while playing connect the ipod.
Not sure what this is going to do.
As far as the ipod being locked, I'm not sure about the details of the 100. My old 300 had a number of settings, one where the ipod could be controlled by the click wheel while connected, the other where it could not. The tech guy is saying to use the mode where the click wheel cannot be used and all the contorl being done via the HU.
The gateway products are brilliant. I never had any problem with mine and the sound quality was every good as the CD. If I recall correctly the 100 has a setting in the menu that controls the AUX volume, which is essentially what you are using, AUX.
Have a chat with Mikey. Unfortunately after recent sevents with the site owners Mikey has decided to take his sponsorship to another forum.