iPod Touch upgraded to iOS 5 is "waiting for changes to be applied"

OK, first it took several hours to actually get the update. Yes, it's understandable considering the millions of users attempting to update their devices on the same day. Well now mine has the update, but then I got hit with the XXGB of "other" storage that supposedly was cured by one of any number of restores. Well now my iTunes (10.5 running on WinXP SP3) can indeed see my iPod Touch (3rd gen, 32GB) and properly shows how much of each data type I have. The problem is now this ...

The iPod is asking me to re-connect the iPod to iTunes. I do so, it runs through the sync/backup procedure, then ends. However, the iPod is still acting like it hasn't been fully set up; in other words, it still wants me to connect to iTunes, like something isn't finished yet. On iTunes, the final step says "waiting for changes to be applied". Is it waiting on input from me, from Apple's servers, the great beyond? Any ideas appreciated.