Well I have a positive update
After I made my last post and slept five hours and reading davidcotton and DMinor suggestions on formatting I gave the card another chance and put it back on my 5.5th gen iPod.
Then connected the iPod to one of my Windows 7 laptops, then when into control panel/Administrative Tools/create and format partitions and noticed that the card actually had two partitions.
So I put the iPod in disk mode and to my surprise I was able to format it with Windows, then I read Tarkan's suggestion about allowing iTunes to partition and format the new cards and did that. The iPod booted just fine and showed 238gb free storage capacity on both iTunes and the iPod about screen.
Then I said to myself, should I leave it like this and forget about putting it in the 7th gen iPod? (Which was the original plan) I took the chance and removed the Tarkan adapter with the Wellcore card still in it and put it back in the 7th gen iPod and tried again. At first Windows asked me to format the iPod and I cancel that, then run the restore in iTunes and it did it faster than before (I thought that was a good thing) then when that finished the iPod rebooted and iTunes stopped recognizing the iPod. I then rebooted the PC and nothing, funny thing is that I could still get in the iPod menu and navigate through it (No music or media in it yet) So i said "screw this!" I then put it back on disk mode and formatted the iPod with windows.
After doing that and rebooting the iPod iTunes then recognized and iPod in restore mode and I ran it, this time it was a success. So far I have transferred the AC/DC and Ace Frehley discographies in ALAC and MP3 320 format and I am using the iPod in my office rocking to For Those About to Rock we Salute you album
One thing for sure is that I will not mess with the card anymore, I will continue to use this iPod as my daily driver and make sure it's stable and I have no issues.
On a non related note I ordered last night an iPod Mini 6gb 2nd gen for $18 in eBay to remove it's internals and put them on the housing of the mini that I currently own.
I have no plan on moving the Wellcore 256gb CF card back to the iPod mini but in all honestly I think the reason it didn't read it was because of the partition issue with CF card. (Same issue across all three iPods.