my daughter has a new iPod touch and has disabled it!!! How do I reset the passcode???

Place the iOS device in Recovery Mode and then connect to your computer and restore via iTunes. The iPod will be erased.

iOS: Wrong passcode results in red disabled screen

If recovery mode does not work try DFU mode.

How to put iPod touch / iPhone into DFU mode « Karthik's scribblings

Connect to iTunes on the computer you usually Sync with and “ Restore “...

http://support.apple.com/kb/HT1414

If necessary Place the Device into Recovery mode...

http://support.apple.com/kb/HT1808