(refurbished) iPod touch 3rd gen won't connect to internet?? Help.

I ordered this iPod factory refurbished from Apple a week and a half ago. The wireless is working fine, I've been using it on my laptop all day and there's no password on it. My iPod says it's connected to the network in the settings and it's got the little wireless signal symbol on the top of the screen, and it's got perfect signal. But when I try to access any app that uses the internet or safari, it says I'm not connected. I've restored it to factory settings and that didn't work, and I've tried multiple times forgetting the network and reconnecting. Nothing's working. My nearest apple store is a ridiculous drive.

I'm not sure what type of router you are connecting to but chances are it isn't an Apple Airport Express.
Anyway, the connection details are telling you that your router is not supplying you with an IP address, subnet mask, or DNS IP address. We need to know a bit more about your setup to make a completely accurate set of suggestions, but I'll give you some general hints on how to get this working.
1. Reboot your router (just unplug the power cord)
2. Reset the touch network settings - tap Settings > General > Reset > Reset Network Settings
3. When your touch restarts, tap Settings > WiFi > Other and re-enter your network name, security settings, and network password.
If you appear to be connected, tap Settings > WiFi > and the little blue > next to your network name. If everything is OK, you will have an IP address other than the 169.x.x.x address you had, a full subnet mask address, the router IP address, and the DNS address.
If you still have the 169.x.x.x address - possible reasons are:
1. You are using WEP. Apple devices are picky about how WEP is implemented. Try using the WEP key value in place of the network password. Better still, change your encryption to WPA2-psk and pick a good 8 character or more password.
2. Your router is really old or the firmware is way out of date. Go the makers website and download the latest firmware for the router and install it.

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