jace, here is my answer from a similar question disabled iPod touch... how do I fix it? Apple says "If you cannot turn off the device using the slider, press and hold the Sleep/Wake and Home buttons at the same time. When the device turns off, release the Sleep/Wake and Home buttons." Now there is a way to erase the password but I am not sure if this would work when you are already disabled. I guess you can always try and hope you have a windows computer :-) anyhow you plug in your iPod. Open My Computer (or Computer for Vista). Click on Folder options and enable to view hidden files. Next go to iPod_control and click on the folder named Device. If your iPod is locked, there will be a file _locked . Rename the file to _unlocked. Remove your iPod and it will be cleared, again not sure if it works for a disabled one. Just thought of something else. Make sure you have your library backed up.
Also check what Apple has to say about that on here http://support.apple.com/kb/HT1808
You can also try to use recboot, available here, which possibly gets your device into recovery mode. How to restore iPod touch? another answer similar to yours. Or you just simply place it in DFU mode and restore it :-) through iTunes. If you need to know how to get it in DFU mode, check on here Hope this helps, good luck.