I cannot connect my iPod touch to iTunes

Question

There are several factors preventing me from connecting my sister's iPod Touch to iTunes on my computer (the same one I used to set up her iPod):
1.  The sleep/wake button is jammed, or just doesn't work. The button ITSELF feels fine.  It pushes down with a "click" feel, like all of the other devices I use, but nothing happens. It fails to turn off or turn on the iPod; it's a dud.  I think this is the main issue.  She's had a problem turning it off, lately.  Since this is an ipod 3, I highly doubt the warranty is still active, and isn't worth getting Apple involved.
2.  She was sleepy when she set her passcode and punched in the wrong numbers (which I don't understand, since it asks you to re-enter the password before it is accepted).  Unfortunately, as a theft deterrent, each time a password is incorrectly submitted, the wait time to re-enter becomes longer and longer until the device is disabled.  Now it shows the message, "IPOD IS DISABLED connect to iTunes".
3.  Connecting to itunes brings up a message in iTunes:  "ITunes could not connect to iPod "iPod Touch" because it is locked with a passcode.  You must enter your passcode on the iPod Touch before it can be used with iTunes."
I Googled the "iTunes could not connect..." message, which gave instructions to restart the iPod with the sleepwake/homebutton trick, but that can't be successfully accomplished with a broken sleepwake button.
I Googled "broken sleep/wake button", but that gave instructions to restore the iPod in iTunes, but it won't connect in iTunes without the passcode correctly entered in the iPod.
I Googled "Wrong password", but that gave instructions to restore the iPod in iTunes.  [sigh!]
I asked my sister if she had a wobbly table or chair with one leg shorter than the rest, and she said she did.  I told her to place the iPod under the short leg. She asked, "How is that going to fix my iPod?"  I replied, "It isn't.  But it will fix your table."  Took her a few seconds to realize that it was all her iPod was good for.
I don't want to resort to the wobbly table fix just yet.  I thought if there was going to be a way to fix this without reaching out to the Apple store (which would probably only be able to sell her a new iPod), this would be the place to find the answer...a place where most genius iDevice users would hang out to help other users.
Any suggestions?

Answer 1

FIXED IT!!!!!
Ok, here's one of the problems I was having (among the others listed above):  I kept getting the message that I had to enter my passcode in the iPod.  I searched for solutions and came across one that said I had to close down iTunes first, before plugging in the iPod, so I did that.
Lo and Behold, the USB symbol appeared on the iPod when I plugged it in without opening iTunes.
I opened iTunes, and Lo and Behold again, the iTunes showed the ipod on the side and the message popped up that said it was in restore mode.  I selected "Restore and download new updates".
I was good to go, right?
WRONG!!!
Every few minutes into the download, I would STILL get a message saying that I had to enter iPod's passcode, and the iPod would return to the dreaded "disabled" screen!  I tried it several times, with no success.
THEN I noticed that even though the iPod was unplugged from iTunes, the update continued to download.
SO...
I waited until the update had seconds left to be completely downloaded.  Then I reduced (not minimized) iTune's window and clicked on the desktop background.  I plugged in the iPod, which again showed the USB symbal.  I maximized the iTunes window, and the message appeared as usual saying the iPod was in restore mode.  I selected the "restore and download" button, but THIS time, it didn't have enough time to reject the iPod.  Within seconds, the download was complete, and the restoration continued as normal (for other iPods, anyway).  I held my breath the whole way, but it's GOOD AS NEW!  By "Good as new", I mean her ipod has no apps or music.  She'll have to reinstall all that, but they're paid for.  Not sure about the music, which was her main concern, but even if she had to buy all that all over again, it's still much cheaper than buying a new iPod.
Guess she'll have to find something else to level her table.
:::::EDIT::::
I'm sorry, planb77, I didn't see your last post.  I forgot to reload.  But thank you for your help. 
By the way, the sleep/wake button still doesn't work right, but she can select to have the ipod shut down after X amount of minutes.  The only thing she'll have a problem with is turning the iPod off all the way (which she never does, anyway...who does?), and take screen shots. 
Message was edited by: vickyfromchesapeake