To follow these instructions you must be using an activated device not stuck on the Connect to iTunes or Emergency Call screen.
Any version of iTunes 9 til 9.1.1 will work.
Download the Spirit Jailbreak from here and save it to your desktop.
Double click the Spirit.app.zip file on your desktop to extract it.
Double click the Spirit application to launch it
Connect your iPod touch and press the Jailbreak button.
The Spirit app will then let you know the jailbreak is complete.
Your iPod touch will reboot and show you progress indicator. Once this finishes your iPod touch will be jailbroken with Cydia installed!