Your Apple ID is disabled or you forgot your passcode ??
If you can't remember the Passcode, you need to restore the device from the computer it was last synced with.
Follow the instructions for putting the device in recovery mode > iOS: Unable to update or restore
"If you restore on a different computer that was never synced with the device, you will be able to unlock the device for use and remove the passcode, but your data will not be present.
Correct, you need to erase the iPod. You can restore to from backup if you have one.
To restore from backup see:
If you restore from iCloud backup the apps will be automatically downloaded. If you restore from iTunes backup the apps and music have to be in the iTunes library since synced media like apps and music are not included in the backup of the iOS device that iTunes makes.
You can redownload most iTunes purchases by: