Is your movie in mp4 format? You need a digital copy of your movie first then you put it itunes, check mark the box for the movie and sync your itouch.
If you have the movie on DVD, you'll need to decrypt it in order to get a digital copy onto your computer. I like DVD Decrypter, but that's me. It's a free download.
Once you've decrypted the movie, you'll need to convert it to .mp4. Handbrake works quite well for this and is super-easy to use. I'm actually converting a movie as I type this (replacing some of the 50+ GB of movies that I had on a stupid POC Seagate external HDD that died ).
Otherwise, if you already have the movie in digital format on your computer (e.g. .avi), you'll just need to convert it to .mp4. Once you've done that, import the file into iTunes and with the Touch connected, click on the Movies tab, then check the box marked "Sync Movies" and check the box next to the movie you want to sync.