how can I transfer music on my computer to the IPOD touch?

By syncing it via iTunes on the computer. See:

iTunes: Syncing media content to iOS devices and iPod

When I try this, I get asked if I want to remove and sync my ipod? I want to add!! So frustrating, have wasted hour, never had this problem until this new itunes version. I have run diagnostics and it says everything is working correctly!! My laptop is registering my ipod as a camera!!!!

It sounds like the iPod was previously synced to another computer/iTunes library. You can only sync to one iTunes library. To change syncing computers see:

Syncing to a "New" Computer or replacing a "crashed" Hard Drive: Apple Support Communities