ipod touch is disabled how to restore it as itunessaying ipod not there ?

You can put it into DFU mode by turning it off, then holding the power button until the apple logo shows up, then holding both the power and home buttons until the apple logo disappears, then let go of the power button but continue holding the home button until iTunes says a device has been connected.

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

Try on another computer

Make an appointment at the Genius Bar of an Apple store.

Apple Retail Store - Genius Bar