Downloaded iPhone 2.0 software update to 2.1 now stuck in restore mode

After syncing iTouch tonight if offered an software update from the 2.0 firmware to 2.1. After paying the $9.95 for the udpate the iTouch is now stuck in recovery mode. When you plug iTouch into computer w/the USB is stays it needs to be restored/recovered. After the 20 minute download. Still nothing. Screen shows a cd and asks for the USB cable. Tried to unplug and while holding home button in plugging back in and same thing. Their software update...nothing found in troubleshooting.

OK, so the restore completes without error but then you get the same thing afterwards?
Let's try the new user:
1. Go to Control Panel > User Accounts
2. Click on "Create new user"
3. Follow the prompts to create a new computer administrator
4. Restart the PC and log in to the new account
Once you're in the new account, open up iTunes and try to restore the iPod. Note that it will download another copy of the iPod software.
CG

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