Trust me it will work!!! it works with any firmware although the unlock feature only works with 4.6 bootloader. So what you do is restore thru itunes to 1.1.3 then run the program that all there is to it. Its way easier them the method you are doing now, i also had problems with that method but on the part where it says
cd /
sh install.sh
Nothing happened i waited for 1 hour til i decided to try this one out, and in 3 mins i was jailbroken on 1.1.3 with the installer app. already on the springboard. Believe me i was skeptical at first to, but said what the hell, the worst that could happen was that i would have to restore back to 1.1.3.! It works my friend, just follow the simple instructions i stated before and in 3 mins you'll be very happy....