Q: My ipod is disabled. It says to connect to iTunes, but when I do that it says" iTunes could not connect to the iPod touch “Myleigh's iPod touch” because it is locked with a passcode. You must enter your passcode on the iPod touch before it can be use

Disabled
Place the iOS device in Recovery Mode
https://support.apple.com/en-us/HT201263
and then connect to your computer and restore via iTunes. The iPod will be erased.
If you forgot the passcode for your iPhone, iPad, or iPod touch, or your device is disabled
https://support.apple.com/en-us/HT204306
If recovery mode does not work try DFU mode.
How to put iPod touch / iPhone into DFU mode « Karthik's scribblings
https://geekindisguise.wordpress.com/2009/07/16/how-to-put-ipod-touch-iphone-int o-dfu-mode/

For how to restore:
Use iTunes to restore your iPhone, iPad, or iPod to factory settings
https://support.apple.com/en-us/HT201252
To restore from backup see:
Restore your device from an iCloud or iTunes backup - Apple Support
https://support.apple.com/en-us/HT204184
If you restore from iCloud backup the apps will be automatically downloaded. If you restore from iTunes backup the apps and music have to be in the iTunes library since synced media like apps and music are not included in the backup of the iOS device that iTunes makes.
You can redownload most iTunes purchases by: 
Downloading past purchases from the App Store, iBookstore, and iTunes Store        
https://support.apple.com/en-us/HT201272

If problem what happens or does not happen and when in the instructions? When you successfully get the iPod in recovery mode and connect to computer iTunes should say it found an iPod in recovery mode.

or
If you previously turned on FIndMyiPod on the iPod in Settings>iCloud and wifi is on and connected go to iCloud: Find My iPhone,
sign in and go to FIndMyiPhone
https://support.apple.com/kb/PH2696?locale=en_US&viewlocale=en_US
and use Remote Wipe
https://support.apple.com/kb/PH2701?locale=en_US
to erase the contents of your device. If you have been using iCloud to back up,
https://support.apple.com/kb/PH12519?locale=en_US&viewlocale=en_US
you may be able to restore the most recent backup to reset the passcode after the device has been erased.
You can also wipe the iOS device by installing the FindMyiPhone app on another iOS device and using that app to wipe the device.