ITunes is refusing to update my iPod Touch 4G

iTunes is refusing to update my iPod Touch 4G. Trying to go from 4.3.4 to 4.3.5 & every single time, I get error code 3194 which means incompatible version of iTunes & iTunes is updated to 10.4. How do I fix this?

This has worked fro others:
3194-How do I reset the hosts file back to the default?

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