Ok Figured It Out
1. Launch Safari
2. Press Command and , (or click safari>preferences)
3. Go to "General"
4. Uncheck "open 'safe' files after downloading"
5. Download 1.1.1 from the link above (Curtsey of CactusChef)
6. You should still get a zip file, though it will not unzip itself. DO NOY UNZIP.
7. the file should end with ".ipsw.zip"
8. Delete the ".zip"
9. An alert should appear. Click "use .ipsw"
10. The file should look like a lego brick with pictures on it.
11. Move the file to the desktop
12. Plug in iPod Touch
13. option-click update, and choose the file on the desktop
14. wait till iTunes install 1.1.1 (can take up to 5 minutes)
15. navigate to
http://jailbreakme.com on your iPod
16. Click "Install AppSnapp"
17. Wait till you see the "slide to unlock screen"
18. You should see "Installer 3" on the iPod home screen.

works for me