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You must:
Shut down the iPod (disconnect first)
Hold the Home and Sleep buttons down until it asks you to shut down.
Slide the slider and shutdown.
Now, hold and KEEP HOLDING the Home button down while you connect the iPod to the computer.
When prompted, restore as a new device.
You'll have no data on the iPod - you'll need to sync again.
Scott
Shut down the iPod (disconnect first)
Hold the Home and Sleep buttons down until it asks you to shut down.
Slide the slider and shutdown.
Now, hold and KEEP HOLDING the Home button down while you connect the iPod to the computer.
When prompted, restore as a new device.
You'll have no data on the iPod - you'll need to sync again.
Scott