First off, get all your downloads ready:
1) your current firmware from this website: http://www.felixbruns.de/iPod/firmware/
2) redsn0w(used to jailbreak): mediafire.com ?vxweer503o6g7zu#1
What you need to do in as few words as possible:
1) run the redsn0w.exe file.
2) click browse and select the firmware that you downloaded above ^^
3) follow all the steps about putting your itouch in DFU mode and all of that and let the itouch do what its gonna do and by the time it opens up again you should have Cydia as a new app
Feel free to ask if you have any questions