Itunes will not open on Desktop PC.

Question

My daughters new ipod need to be restored to factory settings. Ikeep getting the message make sure that the network settings are correct and your network connections are active. I have checked and they are all ok. Can anyone suggest anything else? I have copied the diagnostic here as well if it helps. Many thanks.
Microsoft Windows XP Home Edition Service Pack 3 (Build 2600)
System manufacturer System Product Name
iTunes 9.0.2.25
QuickTime 7.6.5
FairPlay 1.5.23
Apple Application Support 1.1.0
iPod Updater Library 9.0d11
CD Driver 2.2.0.1
CD Driver DLL 2.1.1.1
Apple Mobile Device 2.6.0.32
Apple Mobile Device Driver 1.45.0.0
Bonjour 1.0.6.2 (118.5)
iTunes Serial Number 1E07E5E370A96F87
Current user is an administrator.
The current local date and time is 2009-12-28 18:17:55.
iTunes is not running in safe mode.
Video Display Information
NVIDIA GeForce 9400 GT
** External Plug-ins Information **
No external plug-ins installed.
** Network Connectivity Tests **
Network Adapter Information
Adapter Name: {1A43C6F9-B199-4907-A720-C2C389F8235C}
Description: Realtek RTL8168C(P)/8111C(P) PCI-E Gigabit Ethernet NIC - Packet Scheduler Miniport
IP Address: 192.168.2.3
Subnet Mask: 255.255.255.0
Default Gateway: 192.168.2.1
DHCP Enabled: Yes
DHCP Server: 192.168.2.1
Lease Obtained: Mon Dec 28 13:45:04 2009
Lease Expires: Mon Jan 11 13:45:04 2010
DNS Servers: 192.168.2.1
192.168.2.1
Active Connection: LAN Connection
Connected: Yes
Online: Yes
Using Modem: No
Using LAN: Yes
Using Proxy: No
SSL 3.0 Support: Enabled
TLS 1.0 Support: Enabled
Firewall Information
Windows Firewall is on.
iTunes is enabled in Windows Firewall.
Connection attempt to Apple website was successful.
Connection attempt to iTunes Store was unsuccessful.
The network connection timed out.
Secure connection attempt to iTunes Store was unsuccessful.
The network connection timed out.
Secure connection attempt to iPhone activation server unsuccessful.
The network connection timed out.
Last successful store access was 2009-10-21 17:02:19.
** CD/DVD Drive Tests **
No drivers in LowerFilters.
UpperFilters: GEARAspiWDM (2.2.0.1),
D: ASUS DRW-24B1LT, Rev 1.00
Audio CD in drive.
Found 13 songs on CD, playing time 59:00 on Audio CD.
Track 1, start time 00:02:00
Track 2, start time 04:04:37
Track 3, start time 07:51:30
Track 4, start time 12:06:45
Track 5, start time 15:45:02
Track 6, start time 19:25:67
Track 7, start time 23:39:37
Track 8, start time 27:41:72
Track 9, start time 31:46:30
Track 10, start time 35:36:42
Track 11, start time 39:47:07
Track 12, start time 44:23:37
Track 13, start time 47:53:20
Audio CD reading succeeded.
Get drive speed succeeded.
The drive CDR speeds are: 8 16 24 32 40 48.
The drive CDRW speeds are: 8.
The drive DVDR speeds are: 8.
The drive DVDRW speeds are: 8.
Error Correction is turned on for importing audio CDs.
** iPod/iPhone Connectivity Tests **
iPodService 9.0.2.25 is currently running.
iTunesHelper 9.0.2.25 is currently running.
Apple Mobile Device service 2.50.39.0 is currently running.
Universal Serial Bus Controllers:
Intel(R) 82801G (ICH7 Family) USB Universal Host Controller - 27C8. Device is working properly.
Intel(R) 82801G (ICH7 Family) USB Universal Host Controller - 27C9. Device is working properly.
Intel(R) 82801G (ICH7 Family) USB Universal Host Controller - 27CA. Device is working properly.
Intel(R) 82801G (ICH7 Family) USB Universal Host Controller - 27CB. Device is working properly.
Intel(R) 82801G (ICH7 Family) USB2 Enhanced Host Controller - 27CC. Device is working properly.
No FireWire (IEEE 1394) Host Controller found.
Most Recent Device Not Currently Connected:
iPod touch running firmware version 3.1.2
Serial Number: 1A943HMD75J
** iPhone/iPod touch Sync Tests **
No iPhone or iPod found.

Answer 1

The first thing that the restore process does is launch a network download session from the apple servers to get the firmware file.
I would suggest that any firewal software you have installed is not blocking this access.
Also do know that many people probably got iPods for christmas... Therefore the iTunes servers could be busy and not responding to the download request... You can wait and see if it goes away later when they might not be as busy... Or you can just try disabling your firewall software to see if that is indeed the case.
I don't think it's the device, but limited to the problem of not being able to contact the update servers to get the file... Thus the network connection error.
Regular websites may work due to the fact that they've been allowed by the firewall already, or not as busy.
Hope that helps troubleshoot something for you!