When powered on it says "Use iTunes to Restore" but when that is attempted it gets a red circle with a slash in it, cannot get it to work. Does anybody know how to fix this?
The red circle with a slash in it, is that screen saying "Do not disconnect"? If it is, that's expected when you have it connected to a computer system. Try the restore options detailed on http://support.apple.com/kb/HT1339 its time to bring it into a store to have it looked over. If you eject the iPod from iTunes and it still displays that, try resetting the iPod with the Menu and center buttons held down for a few seconds.