itouch showing usb connection

I have a HP laptop running Win7 x64. First time connecting iTouch to this PC. (My previous Windows Vista 32-bit works fine with this device) After having some issues initially with getting iTunes to locate this device, I followed the recommendation by Apple http://www.apple.com/support/ipodtouch/assistant/itunes/#section_7. without much success.

The Apple USB driver seems to install fine - no error message on the Device Manager under USB controllers. I also followed a recommendation by this forum by deleting the USB driver, and get it to reinstall again. This time the driver fails to load and showed in 'Other devices' with this message - Apple Mobile Device (Recovery Mode).

Also when I plugged the device to the USB cable, the device screen shows a USB connecting iTunes logo.

I am at a lost of what to do next. Appreciate any help.

Thanks

Dominic