iPhone 4 Error 1600

Hey, folks! I've been given a freshly self-repaired-water-damage-survivor GSM iPhone 4 with just one problem: it's stuck in recovery mode. The phone has not ever been jailbroken. Upon plugging the phone into iTunes, the device promptly asks that I restore it. Following in suit, iTunes then shoots an "Error Code 1600" at me. I'm trying to update to iOS 5 (the device is currently running iOS 4.2.1), and am using the latest version of iTunes on Mac OSX Lion.

Now, the iPhone has been plugged in and powered on before, but it seems to be purely by luck; it was after hours of troubleshooting, and at no avail, that I simply left it plugged in overnight. The next morning, I attempted a "hard restart" by holding the power button and the home button, and lo and behold! It powered on. Not long after, it shut off, and was in recovery mode again. I attempted to re-create the previous method, and I failed. At this point, I have no idea what to do!

Another interesting note: the Flash LED is also stuck on, and the battery was freshly replaced after the water damage. The LED may have something to do with the battery drain mentioned above, but I'm not sure.

Any suggestions on how to get this puppy up and running? Thanks!

- Jordan Thornquest.