You cannot delete pics synced to the ipod from the ipod. you have to use the sync process.
Try un-checking the folders and syncing. This should delete all the photos. Then go back and select them again.
As an aside, you need to be importing the pics taken with/saved from the ipod to your computer on a regular basis as you would from any digital camera.
I have to weigh in on this - and my userhandle says it all regarding my competence with any Apple products - But I followed your steps and still have duplicates of about 10 of my 70 or so photos that I want on the Touch. I even deleted something called "iPod Photo Cache" that iTunes(or the Touch itself) created in the folder where my photos came from.
I then resynced from that folder and the same 10 photos appeared twice - in slide show and in the library thumbnails. I can say with authority that they are definitely on there twice and I want the duplicates OFF.
Please Help! I am completely illiterate to navigating around i-Devices and liken them to a car that doesn't use a steering wheel to steer. I need step by step instructions that can be made a sticky here.