Assuming the files were gapless on the CD, all you need to do is use a modern gapless mp3/vorbis/flac/whatever encoder and they'll play the same as the CD. If they weren't gapless to begin with, there is not much you can do besides maybe crossfading.
I don't think USB detection is fully implemented on the classic, so if it misdetects the dock as a USB host, you can hold a button while inserting to go into charge mode (basically, ignore USB devices).