If you want to navigate via the ipod, why bother with the USB input? Just use a 3.5mm jack as your aux. That way all commands stop at the ipod, and the sound comming out of it is transferred via. your head phone socket.
Given the range of ipods and similar MP3 players, its not surprising that there are connectivity issues. You could up date your head unit to something with a processor running windows CE, perhaps with a navi unit in built. They seem to have pretty good on screen connectivity. Like this -
http://cgi.ebay.com.au/FORD-DVD-GPS-...item4a9e5aefd2
Also, without knowing your interface cable, maybe try this genuine ford part -
(has both connectors)
http://cgi.ebay.com.au/Ford-Fiesta-F...item1e5a4be5da
Good luck with it all!