When using working apple ID keep getting message cookies are disabled but they are enabled for visited and also tried always

I gave an ipod touch 4 to my youngest son for his birthday.
Installed iTunes and updated firmware to 4.3.5 (8L1); all OK
Created Apple ID and can logon to this using computer.
When using the working apple ID on the iPod however, keep getting message cookies are disabled. This after it directs to review the new accoutn info.
But cookies are enabled for 'visted'. Also tried 'always'
Also tried hard reset.
Spent a whole day trying to get an apple dev working; still can't use any app.
Needless to say my son is very disappinted (and so am I) :-(
Is there any way to get this working, or should I simply ask for a refund?

Head to Settings -> Safari and tap Clear History, Clear Cookies, and Clear Cache and see if that does any good.
What happens when you rewiew the account info?  Do you verify the provided information?
B-rock

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