right ok below is a pretty easy to follow guide to jailbreak to 1.1.2:
I find the best iTunes to use is
7.5 as 7.6 has fixes in it which can interfeer with jailbreaking to 1.1.2
download the
1.1.1 official firmware and the
1.1.2 official firmware. Save them to a place you will remember. (if you have safari please turn off the auto open when downloaded option)
if your touch isn't already in recovery mode as already instructed plug touch into pc/mac load itunes up and then hold down the lock/wake button and home key keep them held down eventually your touch will shut off, keep the buttons held down and when you see the apple logo let go of the lock/wake key ONLY leaving the home key pressed down and eventually you should get the itunes logo with pic of the usb wire.
iTunes should now say its detected an ipod in recovery mode click ok, now depending what system your using for windows hold the shift key down or for mac options key then press restore and point iTunes to the ipsw file and click open, iTunes should start restoring your touch to 1.1.1.
Point the touch's safari to jailbreame.com, scroll down to the bottom of the page and click on install AppSnapp and soon after safari will "crash" if you wait your touch will start to auto jailbreak (with an onscreen message to this effect).
to upgrade to 1.1.2 first step, go to installer then scroll down to sources, install communitty sources and when the sources has refreshed, go back to install and scroll down to 1.1.1 tweaks and install oktoprep.
Once installed plug ipod in to pc/mac and holding down the shift (windows) or options key (mac) click on update and point iTunes to where you put the 1.1.2 ipsw file and click open and your ipod will start updating.
####MAKE SURE YOU HAVE JAVA INSTALLED FOR NEXT STEP.... GO TO JAVA.COM TO INSTALL####
When updated grab the
1.1.2 jailbreak program and extract to a folder. If you are running windows then run windows.bat if mac then the osx file, tick install ssh and click the jailbreak button. When this has finised doing its thing your touch will reboot when loaded up a few times (this is normal dont touch it

lol)
eventually it will stop rebooting and you will have a successful 1.1.2 jailbroken ipod. first thing to do is install BSD Subsystem, to do this in installer click install then scroll down to system and click BSD Subsystem and click install and install again to confirm.
if you require 1.1.3 jailbreak or 1.1.4 jailbreak let me know