I will have a go at explaining.
On the iPod:
Go to Settings > Wi-Fi > Choose a Network...
You should find that after a couple of seconds a list of wireless networks appears. Touch the network you want to use.
If the network has a little padlock symbol it will ask you for a password, if it doesn't have a padlock symbol it will connect automatically.
If you need to put in a password then you need to find your wireless router.
On The Router:
Have a look for a little sticker or info panel physically attached to the router.
I have an Orange LiveBox so mine is located underneath.
You are looking for a WEP password (also known as a WEP Key).
It is a very long list of letters and numbers that are usually divided into groups of four, with two spare digits a the end.
Type in the password, you shouldn't have to use capitals for the letters, even though for 4AE3 you can type in 4ae3 on the touch keypad and it will work just fine.
When you see a "0" it will ALWAYS be zero, never the letter "o".
Typed all that in? Good.
WAIT!
Before you press "Join" look for a button (usually marked "1") on your router. This button will allow the router to 'pair' with another device. Have a look for "pairing devices" for your model of router.
Once you've pressed "1" or whatever button your pairing button is, you will have about 15 seconds to press "Join" on your iPod.
It's really great once you get it online. I've easily enjoyed the online capabilities as much as, well actually more than the listening to music.
If that doesn't work then let me know and I'll see if I can come up with anything else.
Good luck!