This error occurs when the device unexpectedly loses its USB connection with iTunes. This can occur if the device is manually disconnected during the restore process. This issue can be resolved by performing USB troubleshooting, using a different USB dock-connector cable, trying another USB port, restoring on another computer, or by eliminating conflicts from third-party security software.
Sounds to me like this could be connected to the constant reboots, keep trying to put it in restore mode and recover it. You may need to go to an apple store if you can't get it after 10 attempts. Let us know if it starts working.