I had the same error when I was restoring my iphone but I found a method that worked for me.
fixed it! All I had to do to get iTunes to finish the reformat without getting that pain in the *** error 1604 was:
1.) turn off the iphone and pull the chord from the computer
2.) uninstall itunes and ALL apple products that installed with itunes 7-4
3.) re-install itunes and ALL apple products that installed with itunes 7-4
4.) Pull the SIM card out of the top of the iphone
http://images.google.com/images?sou...2006-03,GGLR:en&q=iphone+SIM&um=1&sa=N&tab=wi
5.) reboot the iphone and get the dammed yellow triangle of death
6.) Turn on iTunes if it did not come on already to get itunes to see the iphone
7.) reformat the phone--(it should work by now)
8.) reinsert the SIM card in the iphone
9.) reactivate the phone
10.) Restore your data from the last back up
Taken form the help forums on apple. All I did was uninstall all the itunes stuff off in windows xp and took out the sim card on the iphone. did a fresh reinstall and attempted to restore again and it worked. Hopefully this might help you.