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This tutorial is written for Windows Vista & included the latest bugfix 0.7.1. If you updated with redsn0w 0.7 then you do not need to reupdate using 0.7.1.

Note: You must upgrade to 3.0 prior to running redsn0w

Step 1: Download redsn0w from http://rapidshare.com/files/24658846...-win_0.7.1.zip

Step 2: Extract the files and put them into a folder on your desktop called redsnow

Step 3: Locate your IPSW file for 3.0. It should be located at
C:\Users\*USERNAME8\AppData\Roaming\Apple Computer\iTunes\iPod Software Updates

Step 4: Copy this file into the redsnow folder on your desktop

Step 5: Put your iPod into DFU mode and connect it to iTunes. To enter DFU mode, turn your ipod off and then hold the lock and home button for 10 seconds, then let go of the lock button while holding the home button. iTunes should say your ipod is in DFU mode an needs to restore, just ignore it and move on to step 6

Step 6: Drag the IPSW onto redsn0w.exe

Step 7: Let it do its thing

Step 8: Enjoy

Note: if it ever freezes or shuts down. Just unplug, reset (hold both buttons), and try again. (thanks the_dark_side_of_pod)

Straight from the iPod touch fans board. Can't wait to get home and try it out.