IPod Touch is frozen after firmware upgrade

Hi, I have a 2nd gen iPod Touch, running firmware 2.2 with Windows XP.
Yesterday I upgraded the firmware to 3.1 from the iTunes store. After downloading the installing the firmware, I got the itunes error 1601 and now, the iPod is perpetually frozen with this screen:
http://km.support.apple.com/library/APPLE/APPLECAREALLGEOS/HT1808/HT180803.png
The iPod device is not detected in iTunes anymore. Also, the 'Found New Hardware Wizard keeps popping up and then it tries to search for the driver but cannot locate it, whenever it tries to search it comes back saying "The hardware was not installed because the wizard cannot locate the necessary software". I checked the Device Manager and it is not listed under one of the "Universal Serial Bus controllers" either.
I have tried the restarting Windows and using a different USB port, but to no avail. Attempts to restore the iPod also leads to iTunes error 1604.
Would appreciate any help! Thank you!

Welcome to the discussions,
make sure your security software is not blocking the USB connection to your ipod, see this article for more info: http://support.apple.com/kb/TS3125
Here's more info about reinstalling the USB drivers: http://support.apple.com/kb/TS1538

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