hi, I lost my iphone and decided to buy my friends old iphone 4 to replace it, Ive fully charged it and put my sim in it which is an o2 sim. It then pops up with ' the sim card you are currently using is from a carrier that is not supported' please help!

Only the carrier it is currently locked to can authorize an unlock. Your friend will need to do that with the carrier he used with it as most carriers will only honor an unlock request from a current or previous customer.

Your friend and whomever they talked to are wrong. That message occurs when your device is locked to another carrier, and only that carrier can authorize an unlock request.

Apple does not unlock devices for consumers - they merely process unlock requests submitted by authorized carriers. Your friend needs to contact his carrier and request an unlock for that phone, assuming the carrier offers unlocking (not all do nor are they required to).

See Apple's own documentation - http://support.apple.com/kb/ht5014