how to get an ipod touch out of recovery mode.

let the iPod charge up completely, then try rebooting it again. If it cannot get out of recovery mode then you will have to restore it from a backup or do a fresh restore.

Try another computer and see if it shows up there. Using a different cable is preferred if you can.

If iTunes isn't recognizing your iPod, you need to reboot your computer and then check the status of the Apple Mobile Device Services driver. This link will will tell you how to do it in Windows and there is a link near the top of the article if you use a Mac. http://support.apple.com/kb/TS1567

In addition to what luvlabs suggested, I would try it on another computer. I have seen multiple instances where an iPod would not get picked up by one computer, but it would on another. A reinstall of the Apple mobile device driver would not hurt either.

If re-starting the AMDS driver doesn't work, you can try removing iTunes and AMDS, then re-installing iTunes (which will re-install AMDS).

If that doesn't work, try putting the Touch into DFU mode. You kind of mentioned it above where you held the buttons down while connected to iTunes, but it didn't sound exactly correct and it can be a little tricky to get the timing down.

While having the Touch connected to the computer (and iTunes running) hold the Sleep and Home buttons until the Touch screen goes black (about 10 seconds). When that happens release only the Sleep button -- keep holding the Home button until iTunes says it found a device in recovery mode. At that point you release the Home button and will have to Restore the device, and you can try re-loading your last backup after the Restore process completes.