Error 16xx is an issue when restoring to custom firmware or official firmware. To fix this, you must use a program called iREB to go into a "pwned" DFU mode, which means that you can restore to anything, including official firmware.
Just unzip the zip file and open the program. Just press iPod Touch 4G and it should be completed in less than 2 mins. After that, it will tell you that it is in a pwned DFU mode. After that, go into iTunes (Version 10 is required) and iTunes should tell you that your iPod Touch is in recovery mode. Ignore it by pressing ok and just click restore. It should successfully restore itself to stock iOS 4.3.3.
Here is iREB (Windows ONLY):
http://hotfile.com/dl/108923557/18f7493/iREB-r4.zip.html