2 Problems with iPod touch 2.0 update.

I got an 8gb iPod touch for Christmas last year, the capacity of the device was 7.82gb, since I purchased 2.0, the capacity has gone down to 7.08.


The next problem is not really anything to do with 2.0, just an app. The 'Remote', I connect to iTunes, it comes up in the devices telling me to enter the numbers shown on the iPod, i do that. It says 'connecting to library', then says 'Could not find library'

The first problem I know I probably can't do anything about it, but has the second one happened to anyone else? If so, how do I fix it?

 

Sorry, I should have said, my iTunes was open.

 

Thanks a lot for the help, but I don't know how to change my firewall settings.

EDIT: I did it, again, thanks a lot for the help.