It looks like you've got a two-part question.
1. Can I fully restore my iPod to factory settings?
Sure.
2. And then return it when I've owned it for less than two months.
You can return it if you've owned it for fewer than 14 days. Beyond that, they aren't going to accept it for a refund. Not a full refund, not a full refund minus the restocking fee, etc.