Forgot your iPod Touch lockscreen password. Don't just restore in despair-here's what you can do.

It's real easy. So first thing you need is an iPod Touch file Browser.
If you already have one (WinSCP works too) then skip that step.
If not: Click Here

In the file browser navigate to Var (its at the bottom). Then under the var category click Root. Under Root choose Media. Then Right-Click "iTunes_Control" folder and select delete (also just selecting and clicking delete on keyboard works). Next if your firmware 1.1.3 or 1.1.4 go back to Var. Under Var select Mobile. Then choose Media. Then right-click "iTunes_Control" folder and select delete (also just selecting and clicking delete on keyboard works).

After your complete click sleep/wake button at the top and then unplug your iPod Touch from the computer. Plug it in and wait until iTunes start. If you have choice select "Set Up As New iPod" if not just give it a name. REMEMBER: The name you give it must vary from the previously acquired name!