So, going by the KBase document that you referenced, I'm assuming that you are trying to update your iPod to iOS 5?
First off, are you using a Mac or a PC?
Is your computers operating system up-to-date?
Is iTunes up-to-date?
If all other software is up-to-date, connect your iPod to your computer. iTunes will alert you that there is a software update that is available. Ignore that for the time being.
Next if you have made purchases from iTunes directly to your iPod Touch, you'll want to transfer those purchases to iTunes:
Mac>control+click on the name of your iPod, in iTunes, under devices.
PC>right-click on the name of your iPod, in iTunes, under devices.
This will open up a menu, and you'll want to choose "transfer purchases", which will copy all of your purchases to your computer. Depending on how many purchases you've made you might have to do this a couple of times (maybe two or three)
After all of your purchases have been transferred, you'll want to create a backup. iTunes does this every time your iPod is connected, however this is a "soft" backup that iTunes will overwrite every time that your iPod is connected. To make a "hard" back-up (one that iTunes won't overwrite) bring up the same menu that was used to transfer your purchases. Another option in this menu is "backup". Select that and iTunes will create a backup that contains all of the information on your iPod, except for pictures that were taken using the iPods camera. Those can be imported by your computer (iPhoto if you're using a Mac, AutoPlay if your're on a PC)
With all of the above done, click normally on the name of your iPod in iTunes and that will take you to the summary page. On that page click "update"and allow iTunes to update your iPod. Do not uplug your iPod or turn of your internet connection while the update is going on.
After the update has been downloaded, it will be installed on your iPod. There will be a status bar on the screen of your iPod that will show the progress. After the update has been installed your iPod will reboot. If, after the reboot you notice things (apps, songs, movies, etc) missing from your iPod, don't panic. From the summary page select "restore". iTunes will ask if you want to restore from a backup, click yes. Then choose the backup that you created before the iOS update, it will be time stamped so try to take a glance at the clock when you make the backup.
After your iPod has been restored from the backup all of your information will be back on, with no data loss.
Hope this helps
So I looked through it, do I plug it into my computer, update Itunes, then delete everything?? I'm really confused plz help!!
No, you don't have to delete anything.
Connect your iPod to your computer and let iTunes launch.
iTunes will perfrom a normal backup and then perform a synch.
When the synch is finished, click on your device name to open the summary page.
On the summary page click on check for update.
Download and install 5.1.1.
This is exactly how I updated 2 iPhone4's, and my 4th gen iPod Touch. Piece of cake..