IPod Touch and iTunes Will Not Work Together.

I just received a new iPod Touch 32GB yesterday and have had nothing but troubles trying to get it to play nicely with iTunes. The Touch is currently version 1.1.5/4B1 (I believe updated to this sometime yesterday).
I am running iTunes v. 7.7.1 (11). When I connect the Touch to my iMac with iTunes running (even though I have it checked, just plugging the Touch in does not open iTunes) nothing happens for a long time and then I get a spinning beach ball which I have let go on for more than 20 minutes at one time.
The Touch and iTunes work fine independently. The last two times after force quitting iTunes, I have received the following error: iTunes could not connect to the iPhone (??) "" because an unknown error occurred (OxE8000035).
Does anyone know what this error is, & how do I resolve these issues?
<Edited by Moderator>

At least atm -
I have re-installed iTunes after restarting the iMac and then restarted again, the Touch connected and showed right away after that and I am happily, currently syncing.
If it goes bottoms up again, I'll be back!

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