why is my ipod stilll using so much of the "other" catergory after it was restored?
Anything from applications (non-iTunes apps), saved games, stored files (using OpenSSH for example). Mainly jailbreak items etc ... make up the (Other) in iTunes.
Anything that takes up space and can not be recognized by iTunes, shows up as 'other'.

I think what is happening is it is installing things from all of your jailbroken apps even though your device is not jailbroken any more. I think what ZHENJiNG LiANG is saying is to restore your iPod as a new device and then sync everything (music, apps, photos) etc... manually instead of restoring from your backup. Because your backup obviously has files in it that no longer relate to your non jailbroken phone.