This procedure works only with Touch firmware 1.1.2, not the most recent version of 1.1.3. The pros with this is that you will be able to install third party applications in your ipod touch and even the apps exclusive to iPhone - such as Mail, Maps, Stocks, Weather, and Notes. The idea for this method to work is set your touch firmware to 1.1.1, jailbreak 1.1.1 and install OktoPrep to prepare 1.1.1 firmware to 1.1.2 update, update to 1.1.2, then jailbreak the updated firmware. Sounds complicated? It's very simple as long as you follow the instructions. So, lets get everything going.

Requisites

• WiFi Connection (of course connected to the Web)
• You need to download the latest version of iTunes
• Download ipod touch firmware 1.1.1 and 1.1.2
• Jailbreak software

Procedure

1. Download all the required software and take note where you have saved them in your hard drive. 1.1.1 and 1.1.2 firmwares are quite large files so be patient. The software for jailbreaking the iPod Touch is zipped, so you need software such as WinRar or WinZip to open it. If you have WinXP as your OS, you might be able to immediately open the zip file.
2. Once done downloading the latest version of iTunes, install it and run iTunes.
3. Plug your iPod touch using the cable that came with the unit and make sure it has been detected by iTunes.
4. In the Summary Tab of your device, press Update while pressing the Shift button down.
5. iTunes will give you the option to locate the ipod touch firmware 1.1.1 you have just downloaded earlier. If you forgot where you have downloaded it, then it's not my problem. Told you to take note where you save your files. LOL!!!!
6. Wait for the firmware update to complete and your touch to come back to life.
7. Once done, open Safari in iPod Touch and type this website --> http://jailbreakme.com
8. Your touch will become somewhat crazy but just be with it, it will install the App Installer needed to install OktoPrep.
9. Once the app Installer has been installed, you should be able to see a new icon in you iPod Touch. Open that Installer and make sure you're ipod's WiFi connection is open and that you can access the web.
10. Click Install and then All Packages, look for OktoPrep and install it. Once done you can proceed to the next step.
11. This time, we will update the iPod's firmware to 1.1.2. So, plug your touch and open iTunes, in the Summary tab, press and hold Shift key and then click Update. Same thing with the 1.1.1 update, locate the 1.1.2 firmware you have downloaded and wait until the update is completed.
12. After this, use the the Jailbreak software you have downloaded earlier to jailbreak 1.1.2 firmware by clicking Windows.bat. If you can't see windows.bat, you might have forgotten to unpack the software. It's in zip format so you should unzip it into a folder and take note where you saved it. And also, before you click Windows.bat, make sure you have closed iTunes.
13. After clicking Windows.bat a dialog box will open. Make sure you check Install SSH and that the password is alpine. Having checked everything, click Jailbreak!.
14. This step might take a while just be patient.
15. Once done, you should see SSH and Installer app in your iPod Touch. You can now enjoy installing third party applications for your iPod Touch through the Installer app.

NOTE: This method might erase all the contents of your touch so make sure you backup everything before you begin. If you find this method insufficient, please see the ReadMe.txt file that came with the Jailbreak software. It's kind a complicated but after reading 3 or more times, you might catch the idea. Also, the SSH app can be used if you have WinSCP installed in your PC. I will probably post a method on how to use WinSCP a few day from now. For the mean time, you can search the web on how to use WinSCP.

Cheers!