I currently live in an area that has very poor internet connection. I can log in to iTunes but it would cost a fortune to download the updates to the OS. Is there a way I can have somebody bring the OS update on a thumb drive and load it from there?
When you plug in the iPod touch, Alt- or Option ⌥-click the device's "Restore" button in iTunes. This will allow you to choose the appropriate
ipsw file to load on the device.
Have someone download the appropriate firmware for your device. Below are links to Apple's downloads of the 4.2.1 firmware.
Option ⌥-click (or Alt-click if using Windows) the restore button on the iPod screen, then navigate to the IPSW file you want to use to restore.