How to Fix Error 1604 on Windows When Restoring With the iPod Touch 2G

Basic Troubleshooting
1. Click 'Start' on your desktop, click the power button and click 'Restart.' For Macintosh computers, press the computer's power button and click 'Restart' on the pop-up box to restart the operating system.
2. Unplug all USB devices from your computer except for the mouse and keyboard.
3. Plug the iPod Touch's cable into the iPod Touch and the computer's USB port, then open iTunes.
4. Click the 'iPod Touch' tab in iTunes, then click 'Restore' or 'Check for Update' to retry the updating or restoration process.
Software Update
5. Open iTunes. Select 'Help' and 'Check for Update' on your PC. On a Mac, click 'iTunes' and 'Check for Update.'
6. Click 'Update Now' to download the software update, then click 'Next' or 'Continue' in the iTunes Setup Assistant to install the update. Click 'Finish' or 'Complete' to exit the setup assistant.
7. Plug the iPod Touch's cable into the iPod Touch and the computer's USB port, then open iTunes.
8. Click the 'iPod Touch' tab in iTunes, then click 'Restore' or 'Check for Update' to retry the updating or restoration process.