Q: unlocking an orange iPhone 4

Hi

I gave my old phone to my granddaughter forgetting it was locked.  She lives in Czech Republic!  I received a text saying the phone was unlocked and to follow online instructions to complete process

As instructed, she inserted a Czech SIM card from her old phone and the instructions said that she should simply complete the setup process.  Problem!  First of all, she got the message SIM card locked and 2 options - OK and unlock.  She pressed unlock and that is as far as she can get.  There is a no service sign at the top and she cannot access the set up process.  Her phone number does not appear in settings

Any help would be appreciated.  Does she need to erase all content and settings from the Czech SIM card before inserting it into the iPhone?