If you are trying to jailbreak 2.0 using pwanage tool and encounter this error while trying to restore in itunes, it means you HAVE NOT CORRECTLY ENTERED DFU MODE. Right now your ipod is stuck on the screen with the iTunes logo and USB cable logo. 1. Connect ipod to USB cable 2. Close itunes 3. Hold the sleep/home button till the screen is black. 4. Open Pwnage 2.0 and follow the instructions to create the firmware restore package (if you already have one on your desktop from the previous try, delete it) 5. Once you finished the package, the next page will tell you to enter DFU mode. 6. It will tell you to connect USB to the ipod. 7. Disconnect the USB to your ipod and reconnect. 8. Itunes will pop up. Close it. 9. On your ipod screen you will see the itunes logo and USB logo. 10. Pwnage screen will tell you to SHUT OFF IPOD, (but you can't since you're stuck on the screen) so you hold the Sleep/Home button until it starts a countdown to shut off. Once it reaches 0. Release the Sleep button while holding the Home button for another 10 seconds. If you are successful it will tell you that you have successfully entered DFU mode. If you are not successful try again. Just hold the Home/Sleep button and repeat the countdown instructions. 11. If you are successful, itunes will launch. It will ask you if you want to update, click yes. Then you will have a choice to upgrade or restore. If you are on a MAC (hold the option key and click RESTORE and find the firmware package that you built with pwnage and select it). If you are using a PC, then hold the shift key and click RESTORE and find the firmware package that you built with pwanage and select it. If you have any questions, post it here.