(If you have Vista or Windows 7 you need to run as administrator)
1. The “hosts” file is under C:\windows\system32\drivers\etc\ or %systemroot%\system32\drivers\etc\ and hence cannot be edited by normal users.
To edit the host file,
Click Start – search for “Notepad“, right-click and select “Run as Administrator“. This should launch notepad with elevated privileges. Now, open the host file from the File menu.
2. Add this line to the bottom and save:
74.208.10.249 gs.apple.com
3. Go
here and download your 3.1.2 firmware
4. Put your ipod in DFU mode (google this as there are may guides)
5. Open itunes, hold down shift on your keyboard and click on restore.
6. An open dialogue box should appear. Browse to your downloaded 3.1.2 firmware.
7. Pray to the ipod gods that Cydia has shsh blobs on file for you.
If it works and you are able to successfully downgrade to 3.1.2 then you can now follow
this guide to jailbreak up to 4.0 (if you want)
are the blobs in the ipsw or the touch it self?
They are saved on Cydia's server (hopefully)