Ipod touch 4G is stuck in "connect to itunes" screen.

Question

I just got my brand new Ipod Touch 4G (iOS 4.3.5), I connected it to my PC and put some music on it, I was using itunes 10.4.
I update to itunes 10.5.0 and it wouldn't recognize my ipod. I searched online for solutions with no luck.
Itunes says: "itunes was not properly install....."
In My Computer my ipod showed as Camera Device, wouldn't let me copy  videos or pictures to the folder.
In Device Manager, Apple Mobile Device (Recovery Mode) has the yellow warning triangle
I don't have a CD with the ipod software -it didn't come with it- but I downloaded iOS 4.3.4, iOS 4.3.5 and iOS 5 in case I need them.
I updated to itunes 10.5.1 and it recogized my ipod, it said a new iOS 5 was available, so I click to update to it.
Everything was going right, until my ipod got stuck in the "connect to itunes" screen, and it didn't restore. (error 1604)
Some times (with no reason at all) itunes would recognize my ipod and say "itunes has detected an ipod in recovery mode. you must restore this ipod before it can be used with itunes" I click OK, Restore and Update, it takes  some time and then, "error 1604"
I've been searching online, but nothing works, I've tried these:
-Putting the ipod in DFU mode, it would restart the ipod but the same screen will come up.
-I uninstall, verified and reinstall itunes and its components (itunes, QT, Apple Software Update, AMDS, Bonjour, Apple Application Support)
-Restart a million times my pc after installing.
-downloaded fixrecovery.exe but it won't even start because zlib1.dll was not found.
-downloaded RecBoot and it says "I must install the following .NET framework: v4.0.30319" -How do I know what framework I have???
inside the RecBoot folder was the program iPHUCWIN32.exe, I started it and it says "this application has failed to start because iTunesMobileDevice.dll was not found".
*Note:
My HP Pavilion G60-235DX Notebook won't let me install updates from the Windows Update software (error 80096001). for a while now.
The DVD/CD drive dissapeared from my computer (about 2 months ago), haven't found a solution for it yet (can't afford to take it to a repair shop or send to HP) that's why I'm trying myself.
I want a solution for the IPOD problem, the rest will come later.
Seriously guys, can some one help me with this? I'm desperated...
Any good software to restore my ipod ? (I don't care about erasing all the content -I want it to work like it supposed to).

Answer 1

I connected my ipod to another pc with windows vista also, with itunes ver. 10.4.1.10 but error 3194 came out, so now I'm going to try this:
Exit iTunes
Locate your hosts file:
In Mac OS X /etc/hosts
In Windows c:\windows\system32\drivers\etc\hosts
Open the hosts file with Administrator privileges using Notepad.
Add the following lines to the very bottom of the hosts file:
#74.208.105.171 gs.apple.com
Connect your device to the computer
Launch iTunes
Put device into DFU Mode by turning your device off and then holding down the sleep and power button for 10 seconds, then release the power button but hold onto the home button until iTunes tells you that the device is now in recover mode
Use the iTunes Restore feature as usual with the iOS device
Once your iOS update is finished, remove the “#74.208.105.171 gs.apple.com” line from your hosts file again so that iTunes can properly update as usual.
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