1st Gen Ipod Touch Won't Restore, Error 1

Search and download iTunes 11.0 (for some reason this version was able to connect with server and restore my ipod)

Uninstall your iTunes make sure all files are erased if you don't the Library from the latest version of iTunes will prevent the older version from starting.

Once 11.0 is running, restore iPod Touch as normal

I did mine from a PC and it worked.

An error code 1 usually means a hardware problem, but Apple has some suggestions here:

http://support.apple.com/kb/TS3694#1

If those don't help, then most likely you either purchased a faulty iPod or it sufferered a hardware failure during the time you have owned it. Apple will still replace it:

http://www.apple.com/support/ipod/service/faq/

but if it were me I wouldn't put any additional money into a first-generation iPod touch.

Regards.

ERROR (1)

- Place the iPod in DFU mode and then restore

How to put iPod touch / iPhone into DFU mode « Karthik's scribblings

- Try on another computer

- Try another cable

- Also, confirm your security software and settings are allowing communication between your device and update servers.

- If still not successful that usually indicates a hardware problem and an appointment at the Genius Bar of an Apple store is in order.

Apple Retail Store - Genius Bar