I'm trying to update to iOS 4.2 right now on my iPod touch 2G, and it picked up an iTunes error #11 after it extracted the software and made my iPod's screen go to the progress bar. Then, the iPod's screen froze to the progress bar of the update and iTunes will not recognize my iPod. I've already restarted iTunes, but the iPod's screen is still frozen to an empty progress bar and iTunes still will not recognize my iPod.
I have the exact same problem. I tried to find the restore from my last updates and my backups, but I think they were moved or something. I've put my iPod into recovery mode, but I can't do anything with it. Maybe it is a widespread issue with iPod 2G?
After restore it states that it can not sync - even though it did, and the iPod can not be found. However, everything seems to work... It plays the apps and the music, so I think I am good. Did install 4.2.1, not 4.2... If anything else happens, I'll let you know.