Place the iOS device in Recovery Mode and then connect to your computer and restore via iTunes. The iPod will be erased.
If recovery mode does not work try DFU mode.
For how to restore:
To restore from backup see:
If you restore from iCloud backup the apps will be automatically downloaded. If you restore from iTunes backup the apps and music have to be in the iTunes library since synced media like apps and music are not included in the backup of the iOS device that iTunes makes.
You can redownload iTunes purchases by:
To do it remotely:
Axeman1020 gave the wrong link his link is for:
iPod, iPod classic, iPod mini, and iPod nano to factory settings.
Not iOS devices like the iPod touch. In addtion, that article restores to factory settings. There is not need to restore to factory setting, restoring from backup is fine.