Ios 5 updates stuck at restoring ipod software

I have Win7 Pro 64bit.  I have been using iTunes and my iPod touch 3G 64G just fine.  I went ahead and started the update to iOS 5 and it is stuck at restoring iPod software.  iTunes progress bar is a little over 75% and the progess bar on the touch is about 50%.  It has been this way for over two hours.
iTunes version 10.5.0.142.
I am able to move around in iTunes.
Able to play video and music from files on PC.
How long is this supposed to take?  Do I need to do anything?
My laptop is a intel core i7 q720.
I have 8GB of memory (DDR3 1333).
So I am pretty sure it is not a system processing issue..
Do I need to close iTunes and/or power off my touch?
I googled and searched here, but was nt able to find anything matching my issue.  Closest thing here was about the beta version.  I could of overlooked something though..
Thanks!
Message was edited by: apl_sith_lord_support

Sat overnight and in exactly the same state...
When I attempt to close iTunes it pops up a message saying "iTunes cannot quit because it is restoring the software on the iPod '[podname]'. This message will be dismissed in 10 seconds."
So I killed it via task manager..  Left USB cable plugged in...
touch now has USB to iTunes 'symbol' on the screen..
So started iTunes.  Now get message stating "iTunes has detected an iPod in recovery mode.  You must restore this iPod before it can be used with iTunes."
Do doing a restore and update.  Extracted software,  Now doing a restore.  Progress bar on touch.  iTunes states "Restoring iPod Software".
I will reply with the outcome.
Thanks.

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