I went through the steps to restore my ipod but once the restore was complete Ithe ipod still says disabled.
Try DFU mode and then restore
How to put iPod touch / iPhone into DFU mode « Karthik's scribblings
Next try the manual install included here:
iDevice Troubleshooting 101 :: iPhone, iPad, iPod touch
After you download the firmware place the iPod in recovery mode and then try the restore.
Retrieving data ...