Can't download software updates in iTunes - error message "network connection timed out"

I'm unable to download software updates for my iTouch 4.1 in iTunes.  I have iTunes version 10.5, Windows 7.  i've tried numerous times in the past and always get the same error message.  I'm now experiencing problems with some of my apps. and I've attempted 4 times in the past 2 days to upload version 5.0. It goes thru the whole download (761.61 MB), says "processing file", then closes out and I get the following message:
"There was a problem downloading the software for the iPod "xxxxx's iPod". The network connection timed out. Make sure your network settings are current and your network connection is active or try again later. Err = .3529." 
I ran diagnostics and it said everything was fine. 
Also not all the apps. on my iTouch are in my iTunes library even though I've synced my iTouch numerous times since I've purchased the apps. with my iTouch.  All the apps on my 2nd screen are on iTunes, but none of the apps. on my 3rd screen of my iTouch are in iTunes. 

Did you check your security software settings? Troubleshooting security software issues
iTunes has to be able to contact Apple during the download of the software and the update process.

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