iPod won't restore

Try a DFU restore

 

Make sure your hosts file isn't blocking Apple, it's going to upgrade it to 6.1.3

 

http://decoding.wordpress.com/2009/04/06/how-to-edit-the-hosts-file-in-mac-os-x-leopard/

Easier just to do it on another Mac or PC. Make sure your iTunes is up to date too.

 

It's because you're trying or have tried to jailbreak.
http://jaxov.com/2011/03/how-to-fix-itunes-error-21-during-custom-ipsw-restore/

Google iTunes error 21 and you'll get suggestions.

 

Then let it upgrade to 6.1.3

 

I have the same issue basically, my ipod tells me error 40 in itunes and i've tried every method to get it out of recovery loop and it WILL NOT. Does your updatelog say something about failed to initialize NAND or failure communicating with NAND? If so you may be in the same boat as me!

 

i was gonna suggest iFaith, but ya your hosts file or firewall was blocking it

 

why would you want to upgrade to iOS 6 from 5.1.1?

 

cuz ios 6 is much better than 5.1.1. My ipod toch 4th gen is 6.1.3.