Can't remember password
I did this and it didn't work. My password is in words.
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Here is my answer from a similar question How to I fix my disabled iPod Touch? 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. Let us know what works and how it is going.
You can also try this BUT WILL LOSE ALL YOUR DATA OF THE IPOD Just place your iPod in DFU mode and then restore under iTunes.
1. Connect your iPod to your computer
2. Turn your iPod Off
3. Press and hold the power button for 3 Seconds
4. While continuing to hold the Power button, press the home button as well for 10 seconds
5. While holding down the home button, release the power button for another 10 seconds
6. iTunes should detect the iPod in recovery mode, press OK, and restore your iPod, from this point forward you may release the buttons. If you have not reached this point, then you have not entered DFU Mode
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If you encrypt an iPod Touch 4th backup on iTunes and then forget your password, you will not be able to restore from backup and your data will be unrecoverable. If you forget the password, you can continue to back up and use the device, however you will not be able to restore the encrypted backup to any device without the password. You do not need to enter the password for your backup each time you back up or sync.
If you cannot remember the password and want to start again, you can use a SmartKey iTunes Backup Password Recovery to unlock iTunes backup password at first.
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