Does this happen no matter what USB port you have it plugged into? Are you plugging the iPod into a USB port on the back of the PC (a.k.a a high powered USB 2.0 port)? Have you tested out another cable?
It wouldn't hurt to also remove any other connected USB devices as they may be hogging the available resources on USB bus lines.
Lastly, try also temporarily disabling any A/V or Security software running on your system and then try to restore your iPod once more.
B-rock