Q: how can i update my ipod 2g from here

To update

The Settings>General>Software Update comes with iOS 5 and later.

Connect the iPod to your computer and update via iTunes as far as your iPod model allows

iOS: How to update your iPhone, iPad, or iPod touch

A 1G iPod can go to iOS 2.2 via iTunes and iOS 3.1.3 via

Purchasing iOS 3.1 Software Update for iPod touch (1st generation)       

https://buy.itunes.apple.com/WebObjects/MZFinance.woa/wa/touchLegacyLandingPage

- A 2G to 4.2.1. Requires iTunes version 10 or higher. If a Mac it requires OSX 10.5.8 or later.

Identifying iPod models

To more easily find compatible apps:

iOSSearch - search the iTunes store for compatible apps.

Apple Club - filter apps by iOS version.

'Last Compatible' Version of Apps for Users Running Legacy Versions of iOS - Mac Rumors

The second generation iPod Touch cannot be upgraded beyond iOS version 4.2.1 What version OS is your iPod currently running, if it's 4.2.1 you can't update more. iPhone OS 1 cannot run apps so you might be running that.