Okay my ipod touch 4g is on 4.2.1, and i think i can restore to 4.1, however i heard that it is tethered for some reason. Is there a way to save shsh files, e.g. with redsnow or ifaith, make a custom ipsw with it and then restore to get an untethered of ios 4.1?
4.1 is untethered. As for saving your SHSH files, redsn0w/iFaith can only save them for the iOS version that is currently installed, in your case 4.2.1. Your only hope is TinyUmbrella. Open it, click on your iPod in the left pane, and click "Save SHSHs". Then post what it says in the white space near the bottom.