Ipod 5 stuck on "Connect to itunes" Update and factory reset dont work

What exactly happens when you try to restore/update via iTunes?

Have you tried:

Place the iOS device in Recovery Mode
https://support.apple.com/en-us/HT201263
and then connect to your computer and restore via iTunes. The iPod will be erased.

If recovery mode does not work try DFU mode.
How to put iPod touch / iPhone into DFU mode « Karthik's scribblings
https://geekindisguise.wordpress.com/2009/07/16/how-to-put-ipod-touch-iphone-int o-dfu-mode/

For how to restore:
Use iTunes to restore your iPhone, iPad, or iPod to factory settings
https://support.apple.com/en-us/HT201252

I Have the same problem as previous user, I followed your instructions and at least the iPod now comes up with the iTunes plug in symbol - iTunes tells me it can't update it an unknown error has occurred (1671) please advise what to do next

1671 is not a good error to get:

Check for hardware issues

If you see error 53, learn what to do. If you see one of the errors below, you might have a hardware issue:
1, 3, 10, 11, 12, 13, 14, 16
20, 21, 23, 26, 27, 28, 29, 34, 35, 36, 37, 40, 56
1002, 1004, 1011, 1012, 1014, 1667 1669
Here's what to check:
Make sure that you have the latest version of iTunes.
Check for issues with third-party security software.

https://support.apple.com/kb/ht201413
Make sure that your USB cable, computer, and network are reliable. Then try twice more to restore your iPhone, iPad, or iPod.
If you still see the error message, you can check for outdated or modified software

Get help with iOS update and restore errors - Apple Support

or contact Apple Support/

Make an appointment at the Genius Bar of an Apple store.

Apple Retail Store - Genius Bar

https://www.apple.com/retail/geniusbar/