READ ALL OF THESE NOTES THROUGH AND THROUGH TWICE before proceeding. You'll need to somewhat anticipate the next steps as you're doing this!
1. Use a second computer and install iTunes... (DO NOT, I REPEAT, DO NOT uninstall iTunes from computer #1 (AKA) the computer you are having the issues with. (You may lose ALL of your iPhone info which is saved on computer #1. The info is already gone from your iPhone, so you will have to restore it!)
2. On computer number 2, once iTunes is installed, hook up your iPhone. iTunes should tell you that it has found an iPhone in restore mode and it must be restored. Go through all of the steps until your iPhone is successfully restored. It should be very easy and iTunes will walk you through it. This will delete ALL of your info on your iPhone (which is really already lost) and it will get the iPhone back to the factory settings (just like it was the day you bought it)...
3. If you keep getting errors saying the iPhone can't be restored, re-install iTunes on computer #2 and try again. (I REPEAT, DO NOT UNINSTALL ITUNES FROM COMPUTER #1) or any computer you may have synced your phone to previously.
If reinstalling iTunes doesn't fix this and you still can not get the iPhone to restore, go to a 3rd computer and try until you get the iPhone restored to factory settings.
4. DO NOT PLUG YOUR iPhone INTO COMPUTER #1 YET!
Once the iPhone is successfully restored to its factory settings, walk back to computer #1. AGAIN, DO NOT PLUG IN YOUR iPhone YET!!
5. On computer #1 open iTunes. Go to Edit/Preferences/Devices and check the box that says "prevent iPhones/iPods from syncing automatically". If this is not checked your iPhone may sync to a corruped restore point and you'll have to start over and re-restore your iPhone.
*Note the device backup window on this screen. There should be at least one date and time from when you previously restored your iPhone. If not, you are probably screwed. Click OK and close that window.
6. Plug in your iPhone and let it do whatever it does. Now, on the left hand side of iTunes RIGHT mouse click on your iPhone icon. Click "restore from backup"
There will be a drop down menu that lets you select from your previous sync dates. AGAIN, if you haven't synced you could be screwed.
Select a date from you which you think the iPhone will work, and click RESTORE.
This should restore your iPhone back to that sync date.
This worked for me!!