Q: configuration screen then Activation screen

I bought an iPhone 3Gs for my wife as she is always using mine. This was advertised as unlocked. When I powered up the phone, first screen is a multi language setup select language followed by set country and wifi. Final screen is Activation and this is where problem starts. It doesn't recognised the SIM card and won't go any further. I have tried two seperate SIM cards with same message.

Strange though that it should start up with the grey config screen rather than the home page with basic icons. My phone which is a hand me down from my son opened into home screen.

Any ideas on how I can get around this and get the phone working. Seller not very helpful.