Cannot Restore My Iphone 4 After An Update, Please HELP!

Hello,

I bought an Iphone 4 from a friend of friend(they are not tech savvy at all). Confirmed with Sprint that its a clean MEID/ESN for activation.

1. Went to Erase all settings and content and it failed, i.e. nothing erased after 3 hours..

2. I went to manually update the software from the Phones menu after being prompted to do so.. Left it sitting and when I came back, it had a picture of a usb cable going to Itunes..

It is stuck on that screen and when I plug it into Itunes it tells me that the device is in recovery mode.. but I can't restore as it fails.. 1st it was error 21, but now its error 1694?

I have spent the last 6 hours googling away an

d trying everything to fix this..

No matter what I do, I cannot get it into recovery mode, HOME BUTTON was working fine...

I even tried something called TinyUmbrella to "exit recovery" and that fails as well.. (link for the latest version?)

Trying to put it into DFU mode, doesn't seem to work.. I have tried:

http://geekindisguise.wordpress.com/2009/07/16/how-to-put-ipod-touch-iphone-into -dfu-mode/

http://www.iphone-mac.com/how-to-put-ipod-touch-into-dfu-mode.html

But it doesn't go into that mode and once the apple logo appears I let go of Power/SLeep and continue to hold HOME button but it just goes back to USB/Itunes mode..

PLEASE can anyone help or offer suggestions?

What happened and how can I fix this?

Regards,

Sean