Put your ipod into DFU mode by holding the Power key and the Home button at the same time for aproximately 8 seconds. After a good 8 second count release the power key but keep the home button pressed. Hold the home key down for about another 10 seconds. This can be done whether it is or is not connected to itunes. Youll know you are in DFU mode when you connect it to itunes and it is recognized as being in a recovery mode, the ipod should also have no display at that time. At that point try doing a restore.