iPod touch as a Hardware

Do you mean as a hard drive? I'm not sure if that's even possible with a non-jailbroken iPod.

 

If you do in fact mean a "hard drive", there are apps such as FileMagnet and Air Sharing that let you store files and view them on the fly, but each one requires you to use their software on your computer to add the files to the Touch. Unfortunately there's no Disk Mode on the Touch the way there is on the Classic, so you don't have the option of getting the Touch to show up in the Finder as a removable drive

 

I'm not sure about the error message problem, but in general you can sync/transfer notes from an iPod Touch to your computer. You turn this on in iTunes, click on your iPod Touch and then select the 'Info' tab. You will find options for synchronizing contacts, calendars, notes, web bookmarks, etc.

Of course if you cannot connect your iPod Touch to iTunes, that is a whole 'nother problem...