I recently got an iPhone (i know the new ones are coming, but i needed a new phone and i don't have to have the latest) and im selling my 1st Gen 16gb iPod Touch.
My question is, how do i make sure the next user can use it? If i restore with iTunes isn't it still locked into my iTunes account? Thanks .
When a computer running iTunes detects any unfamiliar iPod, it presents the user with a dialogue box asking something along the likes of, "would you like to erase all content and synchronize with this computer?"
If you answer yes, then the iPod's link with the old iTunes account will be effectively severed and a new link will be formed with the new iTunes account.
As far as removing your credentials from the on-device iTunes store or the App store goes... I hadn't considered that situation until now...
Well, the password isn't saved on the iPod touch itself, so your account should be relatively safe from fraud as long as you've got a reasonably strong password. According to what I've read, as soon as you synch the iPod touch with a copy of iTunes which is signed in to the iTunes store under a different username, that different username is also synched with the iPod touch.
You could probably test all this yourself by setting up a bogus secondary iTunes account yourself, synching it with the iPod touch, and seeing how it reacts.