I'm posting this because I've tried everything to to fix my iPod 5. When its turned on the same message comes up, "iPod is disabled connect to iTunes." When I connected it it said "iPod... is disabled... to connect to iTunes input password on iPod..."
Thing is the iPod wouldn't let me put in a password... -__-
LONG STORY SHORT I downloaded Tenorshare ReiBoot on my mac to force a reboot and it actually worked!
The only thing is you need to know the iTunes account and password that was originally used to set up the iPod/iPhone/iPad.
I don't believe anything else works.