Forgot passcode

If you don't have the passcode, you'll have to restore the iPod. This will of course erase everything on it, but that won't be an issue if you have everything in iTunes.

If you forget your passcode, you must restore the iPod touch software.

Refer to article http://support.apple.com/kb/HT1414

I read somewhere you can unlock it by unlocking a file i should i do that?

I don't know what you read, or think you read, and what "file" you might be referring to, but you can't unlock an iPod touch when you've forgotten the passcode by any method I've ever heard of. You have to restore it.

Ok I read somewhere you can unlock it by unlocking a file i should i do that?

Your only choice is to restore your touch as mentioned earlier

and if so my iTouch shows up as a camera on the computer but as a iTouch in iTunes

Your computer can only deal with a touch through iTunes. Touches do NOT mount on your computer like a hard drive (like non-touch iPods will).

I have a related, but slightly different problem with a Touch and a passcode. My daughter's Touch was stolen at her friend's house at a sleepover. She did not have a passcode on it when it was taken. The person who stole it put his passcode on it, as well as all hix=s entertainment. My daughter was able to get it back through the intercession of a parent et al, and now she cannot put her music files back on because of the passcode. (I tried restore, but due to the passcode, her computer's iTunes will not allow her to dao anything until she enters the passcode. The person who stole it is not willing to disclose his. Any suggestions, please? Thanks.