FLAC stands for Free Lossless Audio Codec, an audio format similar to MP3, but lossless, meaning that audio is compressed in FLAC without any loss in quality.
iPodLinux is an open source venture into porting Linux onto the iPod (http://www.apple.com/ipod/). So far, we have successfully ported a customized uClinux (http://www.uclinux.org) kernel to the iPod, and written a simple user interface for it dubbed podz