iTouch is stuck in recovery mode, iReset and still stuck?

Will1

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i know we've all been here. so tell me why my 3rd gen. 32gb ipod touch freezes into recovery mode. i bought it yesterday. after i synced songs using the LATEST iTunes, it asked me if I would like to update the iTouch, and I chose yes. THEN hell began.

ALREADY:
-Uninstalled iTunes and apple programs, reset the comp and then reinstalled the LATEST iTunes
-Tried a different port
-Tried a different USB
-Tried resetting the iTouch holding the power button and home button for 10 seconds
-Tried putting in DFU mode holding the home button an extra 8 sec after releasing the power button while having the iTouch plugged into the computer in the iTunes program.
=The DFU mode allowed me to TRY and restore, but then ERROR 1601: COULD NOT RESTORE
-Tried calling apple tech support, they are oblivious

I already returned it, and I got a new one from the same store(Wal-mart).

Opened up iTunes 10 and synced songs to the new iTouch, and when it asks me if I would like to update the iTouch I choose yes, and IT FREEZES INTO RECOVERY MODE.
 
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