That message usually indicates that your phone was hacked or jailbroken to unlock it from the original phone carrier. Then when you update it locked back to that carrier.
Only the carrier that the phone is locked to can unlock it.
Ask the person who gave you the iphone to contact the carrier and have them unlock it for you.
Apple does not support jailbreaking or hacking iPhones to unlock them, and when you try to update or restore such a device, and Apple's servers detect such, you get the nessage you got. Apple maintains a database of officially unlocked iPhones, and if your phone's IMEI number is not in that database, your attempts to update or restore will error out with that message.
So, either get the phone officially unlocked, or get a sim card from the carrier the phone was originally locked to if you want to activate it.
Currently Being ModeratedApr 1, 2013 12:15 PM (in response to razmee209)
Oh. I wasn't aware that it had been hacked or jailbroken. I will find out which carrier it was orginally on, as I used it with Virgin, but now it will not work with Virgin, O2 or Vodafone.
Thanks for your guidance.