My ipod wont get past the "connectED to iTunes" page when i set it up

You can remove all settings and information from your iPhone, iPad, or iPod touch tapping "Erase All Content and Settings" in Settings > General > Reset.
To remove all content and settings from your iPhone, iPad, or iPod touch:
If you wish to recover the data again, ensure that you have an iCloud or iTunes backup and that it is up to date.
Tap Settings > General > Reset > Erase all Content and Settings.
When you select to "Erase All Content and Settings," the process can take from a few minutes to several hours. The time this process takes will vary by iOS device:
Devices that support hardware encryption: Erases user settings and information by removing the encryption key that protects the data. This process takes just a few minutes.
Devices that overwrite memory: Overwrites user settings and information, writing a series of ones to the data partition. This process can take several hours, depending on the storage capacity of your iPhone or iPod touch. During this time, the device displays the Apple logo and a progress bar.
Note: If possible, connect your device to a charger and leave it connected until the process is complete.

Perform a recovery-mode restoreIf your iPhone, iPad, or iPod touch is already showing the "Connect to iTunes" screen, please go to step 5.

1. Connect your USB cable to your computer but not to the iPhone, iPad, or iPod touch until step 3.
2. Turn off the device: Press and hold the Sleep/Wake button for a few seconds until the red slider appears, then slide the slider. Wait for the device to turn off.
   • If you cannot turn off the device using the slider, press and hold the Sleep/Wake and Home buttons at the same time. When the device turns off, release the Sleep/Wake and Home buttons.
3. While pressing and holding the Home button down, connect the USB cable to the iPhone, iPad, or iPod touch. The device should turn on.
4. Continue holding the Home button until you see the Connect to iTunes screen. When this screen appears, you can release the Home button:
   
   Note: If the image of a battery appears, let the device charge for at least ten minutes to ensure that the battery has some charge, and then start with step 2 again. If you don't see the Connect to iTunes screen, try these steps 1 through 4 again.
5. iTunes should automatically open and display the following message:
   [img alt="Alert text: "iTunes has detected an iPhone in recovery mode..."" width="520" height="241" src="http://km.support.apple.com/library/APPLE/APPLECARE_ALLGEOS/HT1808/HT1808--recovery_alert-002-en.png" data-hires="true">
   "iTunes has detected an iPhone in recovery mode. You must restore this iPhone before it can be used with iTunes."
   If iTunes not open after two minutes, please open iTunes yourself.
6. Use iTunes to restore the device.

Its a weird issue but I would suggest trying to restore your iPod back to factory settings, you should be able to connect again after following these steps:
Step 1: Plug your iPod into your computer and open up iTunes.

Step 2: After a few moments, scroll down the left side of your screen until you see your iPod. Select it.

Step 3: The right side of your screen should now show the general information about your iPod. Scroll down the right side of your screen until you see a button labeled "Restore"

Step 4: Click OK. Give it a few minutes and your iPod will be restored to factory settings WARNING: ALL THE INFORMATION THAT WAS ON YOUR IPOD WILL BE ERASED. Once the iPod is restored, it will be able to sync with whatever is in your iTunes library.

Warning, this deletes your songs and videos but will make the ipod work again Make sure your Ipod touch is connected to the computer with the usb cable when doing this. Press the HOME button and the SLEEP/WAKE button at the same time and hold them down. The power off screen may come on but disregard it When the apple logo pops up on the screen release just the SLEEP/WAKE button and continue to hold the HOME button.After several seconds the connect to itunes image will come up. You can release the button and continue Now start itunes. Your device should be recognized as in restore mode and you now just have to click restore. It may take a few minutes but your ipod should be back to factory condition and fully functional. GOOD LUCK.

Try restoring it...here's how...

1. Disconnect the USB cable from the iPhone or iPod touch, but leave the other end of the cable connected to your computer's USB port.
2. Power off the device (Press and hold the Sleep/Wake button for a few seconds until the red slider appears, then slide the slider. Wait for the the iPhone or iPod touch to turn off.
3. Press and hold the Home button while reconnecting the USB cable to iPhone. When you reconnect the USB to iPhone, the device should then power on.
   
   Note: If you see the message "Charging... Please Wait" , let the device charge for at least 10 minutes to ensure the battery has some charge and then start with step 2 again.
4. Continue holding the Home button while iPhone starts up. While starting up, you will see the Apple logo.
5. When you see "Connect to iTunes" on the screen, you can release the Home button andiTuneswill display the recovery mode message:
   
   If you don't see the "Connect to iTunes" screen, then disconnect the USB cable from iPhone and repeat steps 3-6.

you can reset its password....but you'll lose all your data here's how...

1. Verify you have iTunes 7.5 or later. Apple recommends using the latest version of iTunes.
2. Disconnect the USB cable from the iPhone or iPod touch, but leave the other end of the cable connected to your computer's USB port.
3. Power off the device (Press and hold the Sleep/Wake button for a few seconds until the red slider appears, then slide the slider. Wait for the the iPhone or iPod touch to turn off.
4. Press and hold the Home button while reconnecting the USB cable to iPhone. When you reconnect the USB to iPhone, the device should then power on.
   
   Note: If you see the message "Charging... Please Wait" or you see the screen pictured below, let the device charge for at least 10 minutes to ensure the battery has some charge and then start with step 2 again.
5. Continue holding the Home button while iPhone starts up. While starting up, you will see the Apple logo.
6. When you see "Connect to iTunes" on the screen, you can release the Home button and iTunes will display the recovery mode message:
   
   If you don't see the "Connect to iTunes" screen, then disconnect the USB cable from iPhone and repeat steps 3-6.

if the ipod is detected as a removable disk find and delete file named _locked from folder ipod_control>device else you'll hv to restore your ipod to default settings thus losing all your data..here's how:-

1. Verify you have iTunes 7.5 or later. Apple recommends using the latest version of iTunes.
2. Disconnect the USB cable from the iPhone or iPod touch, but leave the other end of the cable connected to your computer's USB port.
3. Power off the device (Press and hold the Sleep/Wake button for a few seconds until the red slider appears, then slide the slider. Wait for the the iPhone or iPod touch to turn off.
4. Press and hold the Home button while reconnecting the USB cable to iPhone. When you reconnect the USB to iPhone, the device should then power on.
   
   Note: If you see the message "Charging... Please Wait" or you see the screen pictured below, let the device charge for at least 10 minutes to ensure the battery has some charge and then start with step 2 again.
5. Continue holding the Home button while iPhone starts up. While starting up, you will see the Apple logo.
6. When you see "Connect to iTunes" on the screen, you can release the Home button and iTunes will display the recovery mode message:
   
   If you don't see the "Connect to iTunes" screen, then disconnect the USB cable from iPhone and repeat steps 3-6.

You'll hv to restore the ipod..here's how...

1. Verify you have iTunes 7.5 or later. Apple recommends using the latest version of iTunes.
2. Disconnect the USB cable from the iPhone or iPod touch, but leave the other end of the cable connected to your computer's USB port.
3. Power off the device (Press and hold the Sleep/Wake button for a few seconds until the red slider appears, then slide the slider. Wait for the the iPhone or iPod touch to turn off.
4. Press and hold the Home button while reconnecting the USB cable to iPhone. When you reconnect the USB to iPhone, the device should then power on.
   
   Note: If you see the message "Charging... Please Wait" or you see the screen pictured below, let the device charge for at least 10 minutes to ensure the battery has some charge and then start with step 2 again.
5. Continue holding the Home button while iPhone starts up. While starting up, you will see the Apple logo.
6. When you see "Connect to iTunes" on the screen, you can release the Home button and iTunes will display the recovery mode message:
   
   If you don't see the "Connect to iTunes" screen, then disconnect the USB cable from iPhone and repeat steps 3-6.

you can reset its password....but you'll lose all your data here's how...

1. Verify you have iTunes 7.5 or later. Apple recommends using the latest version of iTunes.
2. Disconnect the USB cable from the iPhone or iPod touch, but leave the other end of the cable connected to your computer's USB port.
3. Power off the device (Press and hold the Sleep/Wake button for a few seconds until the red slider appears, then slide the slider. Wait for the the iPhone or iPod touch to turn off.
4. Press and hold the Home button while reconnecting the USB cable to iPhone. When you reconnect the USB to iPhone, the device should then power on.
   
   Note: If you see the message "Charging... Please Wait" or you see the screen pictured below, let the device charge for at least 10 minutes to ensure the battery has some charge and then start with step 2 again.
5. Continue holding the Home button while iPhone starts up. While starting up, you will see the Apple logo.
6. When you see "Connect to iTunes" on the screen, you can release the Home button and iTunes will display the recovery mode message:
   
   If you don't see the "Connect to iTunes" screen, then disconnect the USB cable from iPhone and repeat steps 3-6.

This should help!

http://www.fixya.com/support/t2616496-disabled_ipod_touch

Let me know.