Okay,
Drying it out was a very, very bad thing to do, keeping salt residues inside circuits promotes rusting. Follow these instructions at your own risk, I am not to be held liable to anything you do to your ipod although since water had got in it once the chances of more water in it isn't going to kill it is it? 😛
1. Open your ipod, separate the casing from the shell. (You'll need to find instructions from somewhere else on how to open those things)
2. Rinse thoroughly in Distilled Water, no tap water.
3. Allow to dry in warm dry condition, an oven at its lowest temperature or a hair dryer if you're living in cold conditions. --==You must leave it to dry for a good amount of time==--
Unfortunately you cannot remove the battery from those things so you may have killed your batteries life by a bit. I had to do those things when my Treo650 was soaked in seawater but I got it working within the next day. Of course, if all goes wrong, it'll be better to buy a new ipod than get it repaired. Accidents of this nature voids the warranty and the ipods durability quickly shortens after these types of mishaps.