My itouch screen is frozen and I cannot unlock it.

Okay well you have to do a full restore. Turn your itouch completely off. With it off, hold down the circle button and plug in the USB cable connected to your computer. The itouch will power on and you will see the apple, but keep holding in the circle button. After 15-30 seconds, you will see another (different) cable/itunes screen on the iphone. iTunes should then recognize that the itouch is in recovery mode and you can then do a restore. You should be good from there.
Remember, turn off the itouch. Then while its off hold down the circle button and plug it in. Keep holding down the button until the recovery screen comes up. Good luck!!
Now

try these steps

• Connected. and Eject ipod before disconnecting
• Sync in Progress. Please wait...
• Do not disconnect

Put it into recovery mode and the lock will be bypassed.

is it brand new??

if so then connect it to itunes

it is telling you to connect the ipod with itunes

ipod touch only reads apple's usb cord are you using apples usb cord

make sure you're USB is unplugged. when you're at the screen with the itunes symbol and the usb arrow, hold down the home and sleep button until the screen goes black, at this point, keep holding for another 10 seconds. at this point your screen should look black as if the ipod is off. connect to the computer and itunes shoulds show a message like "itunes has just discovered an ipod in recovery mode" you'll be able to do a restore and regain use of your touch.
if this does not work, message me back.

"

1. Connect the iPod to your PC using a USB cord.
2. Open iTunes.
3. Click the Options button in the lower right corner of the iTunes window.
4. Click Enable USB disk use. (sometimes optional)
5. Go to "My Computer" and select your iPod.
6. Select tools and the folder option.
7. Select the "view" tab.
8. Select "Show hidden files and folders".
9. Search for the file (file name differs in earlier versions) but on all models it will be located in the "Ipod_Control" folder aka Settings
10. Look in a folder that is sometimes called "Device" find a file named "_locked".
11. Change the file name "_locked" to "_unlocked".
12. and listen to the good old tunes"

From
wikiHow
Check also
Unlock iPod Screen "

Your itouch is not activated - either you previously jailbroke it and then ran the updates or you never activated / jailbroke the device.

which firmware is it?

try to follow these intructions
http://iphone.unlock.no