An iPod Touch is running iOS, and if you forgot the passcode, there is nothing that can be done except restore from the last backup. You will need the Apple ID password to use it after the restore.
The picture you are seeing (USB cable and iTunes) is the iPod Touch asking to be plugged into the iTunes that it usually syncs with to restore from the last backup.
Usually if you plug it in, then the restore process should start. It can take up to an hour. If this does not work, check a few things:
- Make sure the cable you are going to use is in good condition, plugged directly into the computer, and there are no USB hubs between the computer and the cable. I recommend using an actual Apple cable, but a certified cable should work.
- Make sure the iTunes version is up to date, and computer has been rebooted recently.
- Make the port of the iPod touch that will receive the cable is clean and free of lint. If the sound is on for the computer it should play the tone for USB device connected when you plug in the device.
- Check Device Manager to see if the iPod Touch appears under the Portable Devices.
Sometimes it gets stuck at the restore screen and does not restore when plugged in. There are two ways around this.
- Hard Reset - disconnect the iPod Touch, press and hold the Home and the Power buttons at the same time until the iPod restarts, release the buttons, and when the Apple appears, connect the iPod Touch to the computer. It should start the Restore process, iTunes will detect, restore of the iPod Touch happens, it prompts you for a backup to restore, you select it....
- DFU Mode - connect the iPod Touch to the computer, hold down the Home and Power buttons until the iPod Touch turns off, release the Power button but keep holding the Home button for about 10 seconds. iTunes should show the iPod Touch is in recovery mode and must be restored before use. Click the OK button on the prompt in iTunes, then click the Restore button in iTunes.
Let me know if you run into issues, and the answers can get more detailed. Be sure to provide error messages, model of the iPod Touch, if the computer is a PC or MAC, version of iTunes, and other relevant information so I can provide the best help possible.