How to unlock an iPod touch is also called ‘jailbreaking’. One of the reasons an individual wants to unlock the iPod is to access more of its potential. When the firmware is locked the potential is restricted and you will not be able to install custom applications (apps), including specific ringtones and other such items. Prior to the development of recent software, one would have to open the case to the iPod and the warranty would then be voided. This procedure is totally safe and will not cause your warranty to become void.
If you already are using the firmware for jailbreaking, you must restore the iPod by connecting to iTunes for the restoration program. You will need to use IPSAW file format to download the firmware for your iPod. For an iPod Touch 3rd generation you can go to the site http://appldnld.apple.com/iPhone4/0410667.20110414.95hVL/iPod3,1_4.3.2_8H_Restore.ipsw. The site for the 4th generation is http://appldnld.apple.com/iPhone4/041-0666.20110414.3QvM1/iPod4,1_4.3.2_8H7_Restore.ipsw. You will also need to download redsnow by going to the site http://222.quickpwn.com/redsnow. Save both of these to a file folder on your desktop. Run the redsnow app and follow the prompts on screen. You have successfully unlocked your iPod Touch and can begin using the apps and other downloads you want to install.