Error 3194 during iPhone restoration

I am trying to restore an iPhone 3GS for a friend because the music does not work on the internal speaker but the phone speaker works. I believe it has the new BOT or something. It's currently running on OS 4.1 and I believe it is jailbroken since I can see Cydia on it. I've tried to restore it and update the IOS using my latest iTunes but I only get error 3194. It would download the file and by the time it tries to restore and do something to the phone, it would display that error. Then I believe I would have to download the firmware again. I did this more than 3 times with no luck. Still the same error messages. I am tired of downloading the same update and gets the same result. I even tried to manually download the IPSW files for the phone and SHIFT CLICK on RESTORE but still the same error.

I even made the biggest mistake of clicking on "ERASE ALL/SETTINGS" and I got stuck in the black screen mode. I was able to manage to get out of it by reinstalling redsnow to it, hoping that it would put the screen back so I can install the original Apple software to it, but when I was able to do it, it says NO SERVICE (no signal for the SIM) and the music sound keeps on acting up intermittently.

So to make my very long story short, I just want to simply restore the phone on iTunes either with iOS 5 or 6 without getting any kind of error. I am also hoping that by the time that I update it to iOS 5 or 6, that the SOUND and NO SERVICE issues will be resolved. BTW, I've triend restoring my iPod on the same computer and it seems to be working fine. I don't know if that would help. Hope someone here can help me.

Unit: iPhone 3GS (A1303)

Current State: I believe the phone is stucked in DFU mode. Black screen. No Apple Icon.

iOS: 4.1

Baseband: I don't know how to find that out

OS: Windows 7 (64 bit)