Q: forgotten ipod passcode

My son changed the password on his ipod then forgot it. I followed the instructions of holding the on/off button & home button until it turns off, holding home button while connecting the usb cable, etc. The itunes now shows the restore button but when i click on it it tells me that it cannot connect to the software server because i am not connected to the internet, but i am. How do i make it find the connection? what do i do from here?