if you know the passcode (password) disconnect the usb from either the phone or PC, put the code on the phone, then connect the usb back, after itunes won't show the message, if you don't know the passcode (password)......... turn the phone off, normally (by holding the power button and sliding to turn off) with the usb disconnected, then press and hold the "home button" and connect the usb to the phone and pc, that will boot the phone in recovery mode, you go head and restore then!! let us know any question