Maybe you are talking about "disk utility" instead of "disk mode". On a mac, and I haven't used on in a while, is an app called "Disk Utility", basically "Disk Management" in XP. It allows you to view the hard disks and partitions in and on the computer. Plug the ipod in, find the Disk Utility app. You should see the ipod in there, as a disk. Right click on it, or from the menus, or somewhere, you *might* be able to format the ipod. You, having a windows computer, will want to format it as fat32, and not the Apple format.
If that works, you should be able to put the the touch in recovery mode and push a new firmware, ziphone, etc...from XP.
VERY IMPORTANT: if this fubar's your ipod touch, it's not my responsibility, i'm not liable for it