The 2.1 iPod Touch firmware was released today. I downloaded the firmware from iTunes and PwnageTool 2.1
Pwnage successfully made a custom firmware, I started my iPod in DFU mode, and tried restoring with the custom firmware.
But then iTunes gave me a 1600 error.
My iPod is plugged directly into the built in USB port and I unplugged everything but my keyboard and mouse. I'm using iTunes 8.
There are a few threads on this matter. Just search for "error 1600." When I recently got that error, nothing helped me except for actually just pressing the restore button to install apples OEM firmware and rejailbreak.
It kept switching between 1600 and 2001(?) errors.