Why can't I  update to iOS 5 my iPod Touch 4th gen?
In general, you need to be connected to the internet to validate the install iOS packages with Apple's servers at the time of the restore. It is part of the install process that confirms to apple that your software has installed correctly and it generates the user license rather than asking you to enter a serial number for you allowing you to use the software.

Specifically for Error 1062 you need to remove iTunes and Apple Mobile device support from you applications. Then install the latest version of the software on your PC/Mac.