I could not connect to Kies until I removed all my music that was in folders on the phone.
I copied all music back on to phone just in one music folder via mass storage and can now connect to Kies. This is on internal storage, don't have an sd card yet.
I still can not play music through usb on car stereo like I can a iphone, only works via mass storage mode. Galaxy S does work like iphone in car when I only put a few songs on the phone. Kies software on the phone might have some sort of time out function that is not allowing all the files to be read in time then disconnecting whatever is trying to connect to it.