Here is a basic summary on how it works, first if you don’t have it install already you need to install Itunes and Quick time player into your computer. Next, download a software converter; open the converter upload a video; and then convert to ipod format. The converter automatically saves video to your computer; from your computer right click on the video click on Itunes and from there you should be able to synchronize your ipod to ITunes.
For more details on what type of converter, where can you download, what are the steps follow this link @ Download You Tube Videos to IPod
Let me know how it worked out.