Ok so this is what happens (ahh... bad luck comes in): Ok so I decide to sell my iPhone on ebay because I got bored of it. So I list it on ebay and someone buys it. So I go on the iPhone and click "Erase All Content and Settings" and I leave it on and go out of the house for about 2 hours. When I come back the iPhone is showing the Apple logo and there is a little circle that shows that it's loading beneath the Apple logo. So I wait for another maybe hour, and it's still there! So I hold the Home button and the Sleep button to turn it off, I turn it on and it's still the same. So I decide to restore it by putting the phone into Recovery mode where it shows the iTunes and the USB cord, so I connect it to the computer, but the computer doesn't recognize it!
So I tried almost everything. I updated my computer with the windows updates, I updated and reinstalled itunes about 3 times. I even changed the battery on the iPhone!!!! I had a spare one....
Please if you have ANY suggestions on what to do please tell me! I am completely out of ideas. It's definitely not the USB cord because if it didn't work I wouldn't be able to put the phone into Recovery mode.
anyone? 
Edit: btw I have the 2G 4GB version iPhone and I am using a Windows XP computer. But I also tried it on my mom's Windows Vista laptop.
So I tried almost everything. I updated my computer with the windows updates, I updated and reinstalled itunes about 3 times. I even changed the battery on the iPhone!!!! I had a spare one....
Please if you have ANY suggestions on what to do please tell me! I am completely out of ideas. It's definitely not the USB cord because if it didn't work I wouldn't be able to put the phone into Recovery mode.

Edit: btw I have the 2G 4GB version iPhone and I am using a Windows XP computer. But I also tried it on my mom's Windows Vista laptop.