You got water damage which voids your 1 year warranty for a free replacement, so your only alternative is to get a ziplock bag and throw your ipod in it. Then fill that ****** up with rice. Brown, white, long grain, jasmine, or Uncle Bens. You pick it doesn't matter. Seal that bag up and let your ipod remain buried for a week. The rice will **** up every bit of moisture in the ipod. Your ipod will be as dry as the Mohave desert after a week. See if that will help you out.
If your still pissed, then go on to you tube and find the shady Hispanic guy who will show you ways to beat the system and get your ipod exchanged for a brand spankin new one.