Well, contacted Creative and they were more than helpful. here is the solution that I was provided and it worked quite easily. I'll post it here for anyone's reference.
With regards to the issue you are having, I would advise you to update
the firmware: Creative NOMAD Jukebox 3 firmware update (version
1.40.06p) (1.47 MB) from the link below.
http://us.creative.com/support/downloads/1. Remove the battery.
2. Insert the battery while holding down the Stop button or connect the
unit to its main power supply
3. As soon as the Creative logo appears on the screen during the boot
sequence, release the Stop button.
4. Press the Play button once immediately.
5. The unit boots to a Diagnostics mode
Note: Reloading your Operating System should not affect the contents of
your Jukebox3.
How to Reload OS (WARNING-you will need to have the latest firmware
version downloaded to your computer BEFORE trying to reload the OS. If
you need assistance with this, see below):
On the Jukebox player enter Rescue Mode.
Connect the power (DC) Adapter to your player and Attach your player to
your computer with a USB or 1394 cable.
Ensure the battery is fully charged before carrying out this procedure.
Close all other software applications.
Disable Nomad detector in systray (right click on NOMAD Detector and
uncheck "Enable NOMAD Detector")
From Rescue Mode Scroll to Option 3 and press the scroller.
The Message OS will be erased. Reload it via 1394 or USB. Continue?
appears
Choose the correct icon (Yes) using the scroller.
Erasing OS... appears.
When you see the message "Start Firmware update now!" do so as quickly
as possible.
Now upgrade the firmware v1.10.06
Download the firmware file to a folder you create on your Desktop (e.g.
call this folder Jukebox Firmware)
Double click on the file downloaded and this extracts 3 files.
Start the Nomad Jukebox 3 Firmware upgrade .EXE program called
JB3PCFW_1_32_02.exe
Follow the onscreen instructions.
When Windows informs you that the player is detected, click the Upgrade
button.
When the "Player is now rebooting" message appears on your computer and
the "Please Reset Player" message appears on your player's screen,
detach your player from your computer.
Reset your player by inserting and pushing a straightened paper clip
into the reset opening located on the bottom side of your player.
When you reset your player, you may see that your player's screen
displays only the charging icon.
Press your player's POWER button to turn on your player.
When you reset your player, you will see the "Rebuilding Library"
message displayed on your player's screen. This process may take several
minutes to complete, depending on the number of songs you have loaded
into your player.
Reconnect your player to your computer.
Click the Close button to complete the firmware update.
Verifying the firmware version
Press the POWER button to turn on your player.
Press the MENU button to enter Menu.
Scroll Select Jukebox Settings.
Scroll Select Jukebox information.
Your player's Firmware version is displayed.
Step 4:Reboot
Restarts Jukebox3 and allows you to exit Rescue Mode.