Iphone 3GS ONLY powers on with AC not with computer and unable to restore

Hi,

So I have an Iphone 3GS 16GB. This is my uncle’s iphone. He updated it to 5.0.1 just last week and was using it fine but he just dropped his phone and thats when all these problems started.

The only way I can get the iphone to turn on/show the screen is when I connect it to an AC power source. The Apple logo comes ON goes to the password screen, I put in the password and then it shows the earth globe with the USB cord and it tells me to connect to iTunes. The problem here is once I disconnect the USB cord, the screen and phone shut OFF completely. Neither the touch screen nor any of the home/sleep button work as if it just turned off on its own after removing the usb cable. I also took note of the battery percentage it says 100%. Also once I remove the USB cord I can see the screen goes black and I can see dark vertical black/gray lines. However they go away once I plug it back into the ac source.

I've tried connecting to 2 different computers with updated ITunes 10.5.2 (latest update). I've tried 8 different USB port (all confirmed working) and 2 confirmed working Apple USB cords, however neither of the computers recognizes the Iphone. The ONLY way I can get the computer to recognize the iphone is while it connected (still has a black screen since it doesn’t turn on) I put it into DFU mode (press and hold sleep button for 3secs, then press and hold home button for 10secs, then release sleep button and continue holding home button for 10 more secs) I can hear the computer makes a tone that it recognizes the phone and iTunes pops up with a message saying iphone is in recovery mode and needs to be restored or something down those lines so I click restore & update. it downloads the latest IOS 5.0.1 (even thou my uncle said it already has the latest update since he did it a week ago) it goes thru all the processes (still have a black screen) then it goes to a bar on iTunes that says (verifying iphone restore or verifying iphone restore with apple) the screen turns on to a lite Black screen for about 5-10secs doesn’t display anything (usually it shows a progress bar on the iphone but it doesn’t) then the phone turns off and it makes the tone on the computer that the phone has been disconnected when it really hasn’t. I always get 2 error messages (1602 or 1604) I've been trying for HOURS to try to get it to work but I am stumped.

I asked my uncle if it was hack or jailbroken he said no, he hasn't done anything like that.

If anyone can please help me out I would greatly appreciate it.

Thank you very much.