To reset your iPod:
Tip:
i would be checking the usb lead before doing anything or even replacing it with a new one make sure iis securely connected
the cable near the iTunes symbol represents a problem with the cable
and the cd will not not be able to activate without a connection
Connect one end of the USB sync cable to one of your computer's unused USB ports, and connect the other end to the bottom of the iPhone or iPod Touch.
If iTunes does not start on its own, run it using the desktop or Start menu shortcut.
When iTunes starts, you should see an icon for the iPhone or iPod Touch on the left side of the window.
Click "Summary" in the right pane of the window if it is not already active.
Click the "Restore" button to begin the device restoration process.
ITunes displays a message asking if you want to save the contents of the device to your computer before restoring it.
If you have not backed up the device already, click the "Back Up" button.
If you have already done this, click "Don't Back Up."
Click "Restore." ITunes clears the data from your iPhone or iPod Touch and reinstalls the device's original firmware.
The screen of your iPhone or iPod Touch may shut off while iTunes works.
Do not remove the USB sync cable.
When iTunes is done restoring the device, it displays a message letting you know that the device is about to restart.
Click "OK" to restart the device. If you are restoring an iPhone or iPod touch, wait for the "iPhone / iPod touch is activated" message to appear on the screen of the device before you disconnect it from the computer.
You may now restore your backup of the device or remove it from the computer.
hope this helps
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