How do I create and use an Apple ID without a credit card or gift card?

My brother just bought a Ipod touch 2nd generation, ios 4.2.1, but I was trying all day yesterday trying to setup his Apple ID, but it keeps asking for his credit card. I read through some other posts that said to download a free app and it'll give you the coice to create a new account. So I did that. I filled out all of the information and it let me select "None" as the billing information, so I thought it was all set. He verified the account through his e-mail, it said "Your email has been verified", so he tried to sighn into the app store using his e-mail he verified, but it said something like "This ID hasn't been used on this device". The only options were Cancel or Review, so I clicked review and it took me to the registration thing again, all of the info was already filled out, except the billing info which wouldn't let me select "None".

I tried sighning his account on to my ipod touch, it did the same thing as his, He's sighned in with mine right now, but whenever he downloads something, it downloads for me too.

So if you can help, I'd really appriciate it, because it pretty annoying.