Can speakers short NANO Batteries?

I hooked up my iPod nano 6th Gen (obv. under a year old) to a stereo system at work via your typical auxiliary chord yesterday. I placed the nano next to the speaker and there was a loud noise which prompted me to quickly remove my device from the stereo. Then my nano was frozen. Then the battery died. When I plug it into my Mac everything is fine, except that when using the headphone jack the music comes out scratchy and undefined.

What has happened? How do I fix it?

HELP HELP HELP!!

Is your Nano still under warranty? (If you bought an extended warranty that is.) I had a 6th Gen Nano freeze and was given a new one by Best Buy but I bought an extended warranty for it.