Here is a simple work around for people having problems with Blackra1n and the iPhone 3G:
1. Restore a clean build of 3.1.2
2. Close iTunes
3. Copy Blackra1n.exe to C:\ and run as Administrator (No need to run as admin for XP users)
4. Click "Make It Rain"
5. Wait for the phone to shut down, then instanly press and hold POWER + HOME
6. As soon as the Apple logo appears, let go of POWER but keep holding HOME until the Blackra1n logo appears on the screen.
7. Enjoy
Worked perfectly for me on Windows 7.
I'm a Vista user and it didn't work until i restarted my laptop and I let off the power+home button while the phone was powered down and quickly pressed and held down both buttons until the Apple screen back up,then left off the power while holding the home button - 20seconds later - almost giving up again...the Blackrain jailbreak screen popped up ! Yea!
I'm not sure if:
1.) Letting off the buttons once while powered down did the trick.
OR
2.) Restarting my laptop.
Since i did two things differently on my third attempt, i'm not sure which one was the fix, but it's working now.
Another thing, If you get stuck at the itunes activate screen and hit home+power and i doesn't restart completely, you don't have to restore again thru itunes. Try the home+power button again and it will return you back to your normal status <- there should be a 30-45sec wait during the Apple screen. I was restoring everytime when i couldn't get off the itune activate screen. That's not necessary.
Keep trying new stuff. You'll get it eventually.
MemphisDAve