Ok I got it to work the second time. It was fairly easy.
The first try I did the automated method for the Original iPhone.
I have it Jailbroken/Unlocked to V2.0
The easier to save everything in one directory.
1. Download Pwnage 2.0 (
Here
2. Download Bootloaders (
Here)
3. Download Firmware from iTunes, this is the best method. (stored in ~/Library/iTunes/iPhone Software Updates)
4. Click on the iphone and do Expert mode
5. Follow the steps to pick the Firmware and the two bootloaders.
6. then Under the expert panel you should see 6 icons and the Build button at the bottom.
7 click on general and select update baseband.
8 Everything else should be setup automatically (all the settings for different icons)
9 You can change to default apple logo from the pineapple logo under the custom logo icon.
10. Build
11. Save it to the same folder or somewhere u can find it again
12. Put iphone in recovery mode (*Keep it connected to the computer via the USB* Turn it off then hold home button until you see connect to computer. Some phone you will have to hold sleep/wake + home button after the phone is turned of to put it into recovery)
13. After its in recovery, goto itunes and you should see the iphone. click on restore while (alt/option is pressed). This will open a dialog and ask you for the ISPW (firmware) file. Select the firmware you just built.
14. Let it fully restore the phone.
15. Enjoy
Disclaimer: This worked for me and might not work for you. I am not liable if you screw up your phone or if anything bad happens to your phone.