iPod Screen Stays on Apple yet still functions?

Well around a year and a half ago I had let a friend of mine borrow my ipod 2 days later it was returned to me, I noticed the colors were warped on the screen and it had the connect to battery logo since the ipod hadn't been charged. I got home and restored it yet the ipod was stuck in the Apple logo. I assumed it was frozen so I tried restoring it multiple times. I learned how to put it in disk mode and diagnostics mode and the weird thing was that the screens were clear and it did not seem like any water damage had been done to the LCD. I checked the SMART data and there was and still are 0 reallocated sectors. Months later I turned my ipod on which would always boot up on the Apple logo with the warped colors which it is always stuck on that screen and I noticed after a while I could hear the click wheel. So in a sense it did function, I learned how to count the clicks down to shuffle and how to listen to an album by holding the center button and choosing the Artist, Album, or All songs just by counting the clicks. After a while if the ipod goes to sleep once you resume it you can see the screen as if it were normal for example you can see the menu or album cover but the thing is once it does that it freezes and stays static. The colors are still warped. So I'm really confused as to what the problem may be?