2nd Generation iPod Touch won't upgrade to iOS 4.2

I just traded my old 2nd generation ipod touch with apple for one with a new battery. I sync it with itynes and am told to upgrade the IOS to 4.2. When I try, i get this message: The iPod "Bob's iPod" could not be restored. An unknown error occurred (-1).
I have also tried to update the software using my older MacBook with an earlier version of iTunes and get the same message. I even complained to Apple and they sent me another replacement and I still get the message. I am told that you can upgrade the 2nd generation to 4.2 but it doesn't work for me. I have disabled my antivirus software and everything else I can think of. Does anyone have a suggestion as to what I may be doing wrong?

Error -1
Attempt to restore your iOS device two more times. If the issue is still unresolved, the device may need service.
The "device may need service" means a hardware problem. In that case make an appointment at the Genius Bar of an Apple store.
Apple Retail Store - Genius Bar
Also see:
-1 error
-1 error too

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