Ipod touch stuck on 'connect to itunes' - Restore is not working

We've got an Ipod touch (no idea on generation) that we were trying to sync some apps to from a laptop (not mac), they wouldn't sync so we tried resetting the ipod and syncing everything together. After resetting when we tried to access the ipod on itunes it just came up with 'could not connect to itunes store' (where we are it is currently blocked) which meant that we could not access the ipod via itunes in any way and then ipod was then stuck on the 'connect to itunes' screen.
We tried turning both it and laptop off and on again, disconnecting etc. Then tried the restore using the home and on/off button which triggered the restore via itunes by putting it into recovery mode and it downloads everything fine but the ipod still remains on the connected to itunes screen - we've now tried restoring it 4 or 5 times.
I was confused as to why the ipod wanted to connect to the itunes store in the first place because it has never asked to do so before and as it is blocked here then for every sync before this it has not been connected nor has it wanted to be. Perhaps it's to do with the apps? But there are apps already on the ipad. Perhaps taking the laptop and ipod to somewhere with wireless where the itunes store isn't blocked will allow us to access the ipod and restore/reset/sync and that will fix the issue?
We're loathe to take it all the way to the nearest apple shop, especially on a wet Sunday, just for them to tell us that their only advice is to trigger the recovery mode which we know doesn't work! So any other advice is much appreciated.
Just to clarify, we have been through recovery mode 4 or 5 times and done a full restore on it, with it downloading all the software and firmware and it hasn't worked.

To restore an iPod an internet connection to the iTunes store is is required. iTunes on the computer has to g to the Apple server to verify that it is using the latest firmware update.

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