IPod Touch Unable to Restore After Connecting

Hi there,
Before I explain my problem, here are my specs:
- Running Windows XP with iTunes 9.0.2.25 (laptop is 3+ years old)
- iPod Touch 2nd Generation, 32GB running OS 3.1.2
- Purchased the iTouch in December 2009 from an online Future Shop sale
My iTouch was working fine this morning - until I tried accessing a site in Safari. Everything froze, so I just did a manual shut down by pressing the hold and home buttons together. Afterwards, the device tried rebooting, but continually got stuck at the Apple logo screen (without the spinning loop). A few seconds later, the screen would light up and then turn off. Then, it would continue to try rebooting.
It seems to me that it's stuck in a reboot loop. However, when I try entering DFU mode, it sometimes works (I've tried this many times today and nothing seems to be working). When I plug in the device into my laptop, iTunes is able to recognize it and prompt me to restore it.
When I click on the restore button, the iTouch is stuck at the Apple logo screen (with a progress bar), while my iTunes shows "Waiting for iPod...". After ten minutes, nothing happens - the progress bar on my iPod doesn't move at all.
I've tried restoring my iPod for about 2 hours today to no avail. I always get stuck at the 'Waiting for iPod' screen.
I contacted Apple Support earlier today via telephone, but it wasn't really helpful since I already carried out the same steps the support member gave me (enter DFU mode, connect iPod, restore).
Can someone help me? It's only been 3 months, so I'm not sure what is going with the device.
Thank you in advance!

When I click on the restore button, the iTouch is stuck at the Apple logo screen (with a progress bar), while my iTunes shows "Waiting for iPod...". After ten minutes, nothing happens - the progress bar on my iPod doesn't move at all.
What security software are you running on the PC, diav? (Firewall, antivirus, antispyware?)

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