Can't delete items from iPod or iTunes

Help! I have an iPod nano 5th gen.
It has always worked well but it's full and I want to put new music on it.
iTunes is not letting me delete material. I know how to do it and have never had a problem before.

There is a fairly new Cloud function on my iTunes library. I have tried downloading the songs I want to delete, then pressing the Delete key. I am asked whether I want to put the songs in recycle bin or keep them elsewhere (but off iTunes). I have tried both options but the songs do not disappear, either from my iTunes library or from my iPod.

I have opened the playlists and ensured that all is in place for deleting material. I have followed the instructions in the Help dialogue. All to no avail....

I tried posting a question on the apple help forums but was told I do not have permission to do this, in spite of having an iTunes account and username. Brick wall. Head. Banging.....