Make sure your iPod is not connected to a computer.
Press and hold the power and home buttons simultaneously for 20-30 seconds.
A 'connect to iTunes' icon will appear on the iPod screen.
Your iPod is now in recovery mode.
Connect it to a computer. iTunes will recognise it as an iPod in recovery mode.
To get out of recovery mode, download the free app ZiPhone from the internet onto your computer. Select Advanced Options and go to Normal Mode.