When I connect itouch to Windows 7 network, the itouch finds the PC but asks for a password which I have not knowingly added. How do I find this, or which password is it ?

At the Win 7 pc, Under network & sharing center>advanced sharing setting, scroll down till you see password protection sharing and next check turn off passwprd protection sharing, once done try connecting again

Think you have enabled password protected file sharing in Windows 7, and so it requires your to key in password when you try connecting to it. Check out this simple file sharing article, think it's the one you are looking for. Hope this helps.