Recently the home button on my wife's 1st generation iPod Touch stopped responding. Everything else worked fine. As usual I immediately jumped on Google to see what I could find and it turns out there is common issue with the spring under the home button. The glue holding it in place can come loose and the spring can shift. This seemed like the exact issue my wife was having.
Since the iPod was out of warranty I knew Apple wouldn't do anything. A quick call to Apple support confirmed that I was completely out of luck and one of their technicians told me I'm better off buying a new one. Not happy with this response, and not willing to shell out another couple hundred dollars for a new iPod just yet, I decided I would try and fix it myself...
*One quick note: I do not claim responsibility for any damage incurred from following these steps. You are disassembling a device that was not meant to be taken apart in your home. If your iPod is still under warranty then do not follow these steps. Contact Apple for the approriate support.
Step 1: Remove the casing
This is the first and probably the hardest part. You can use a variety of things to take the case back off. Any thin metal tool (as thin as possible but not too brittle). I didn't have a special tool to remove the panel so I used a small flat screwdriver and a razor blade. Do be careful though.
There is a seam all the way around the outer edge of the iPod. Place the iPod face down and using your tool of choice, pry around the edges. Go completely around the outside of the iPod except for the top because it's possible you can damage the power button. The case will start to lift eventually. It can take a bit of work and please note that unless you are really careful you will scratch the metal casing.
The back casing will pull completely off. There is nothing attached to it so don't worry about pulling it off.