Do this to restore to the 1.1.4 firmware, then unlock via ziphone. This guide will walk you through the whole process. I have never been able to brick an iphone. Seen a bunch but a restore always fixed any problem i came across. So dont worry about bricking it. If you get stuck, just post on a forum and they will help you, tons of people like me browsing iphone forums.
A restore will get it as close to out of the box as possible. (youd just have to restore to the firmware version that came on your iphone and then it would be like an out of the box one)
here is unlock/activate/jailbreak process. Youll want to do it all.
go to modmyifone.com and click on download section. Select 1.1.4 firmware for iphone (make sure its not the itouch)
Make sure phone is off. Turn on itunes. Now while plugging in your phone hold the home key (the round one with the square at the bottom of your phone) this should get you into recovery mode.
Then hold shift and click restore and select the 1.1.4 firmware you just downloaded. This will take a few minutes.
When its done close itunes and go into task manager and close ituneshelper as well.
Next, go to ziphone.org and download ziphone 2.5c
run this program, turn your phone off and plug it in while holding home key to put it into recovery mode,
Lastly hit do it all button in ziphone menu and it will take 4 minutes and youll be all set.
Insert sim and enjoy!
If you need more help you can go to modmyifone.com