Ipod touch is stuck on connect to iTunes screen and won't restore settings.

So, I'll start from the beginning.
I wanted to update my twitter app, so i installed it but it took ages and so i pressed the home button and the top button at the same time. Then the apple logo appeared for over 30 minutes. The screen then went white and the 'connect to iTunes' screan appeared.
After connecting it to iTunes a box appeared saying iyune has detecehed an ipod in recovery mode. You must restore this ipod beofre it can be used with itunes. OS 5.0.1 Software Update So when i try to restore it the normal box comes up saying everything will be deleted. So i click ok, and another box comes up with iOS 5.0.1 Software Update. As i try to go through with this update when there are 8 minutes left to it my iPod automatically disconnectes itself and this message comes up again about the ipod is in recovery mode (above)
And now i dont know what to do as i cannot restore my ipod from my ipod or from my computer? I have tried re-starting it and i have the latest version of itunes.
Please help:)

Maybe this:
Restore loop (being prompted to restore again after a restore successfully completes): This issue is typically caused by out-of-date or incorrectly configured third-party security software. Please followTroubleshooting security software issues if USB troubleshooting does not resolve this issue.
Above from:
http://support.apple.com/kb/TS3694

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