Summarize:

You will be creating a backup point to restore to in case you are unable to successfully jailbreak the iPod. Open iTunes. Click on your device in the sidebar. Choose “Back Up Now.” This will make a backup of your data, apps, and settings. If you have a passcode lock on your device, it must be turned off for the jailbreak process. You can turn it on again once the jailbreak process is complete. Your iTunes backup password must also be disabled during the jailbreak process. In iTunes, click on your device and uncheck the “Encrypt Local Backup” box. You will need to enter your password and backup your device again.
Install the latest version of iTunes. Plug your iPod into your computer. Disable your iPod screen lock.