your phone is in the recovery mode. You need to restore your phone through itunes. In order for the phone to be unlocked, you need to restore it using the custom restore.ipsw. Please don't update through itunes, because it will update your phone to the latest version (version 3.1.2) in which the modem firmware is also updated. If your phone modem firmware is 05.11.07 you only can jailbreak the phone(no unlock at this time for modem firmware 05.11.07 and above). If the modem firmware is 04.26.08, you can jailbreak and unlock the phone using redsn0w 0.8. After jailbreak, turn on wifi, select cydia on springboard, select manage, select source, select edit, select add, type repo666.ultrasn0w.com, add source. Now can see the repo666.ultrasn0w has been added to your cydia source, now select repo666.ultrasnow.com, it will open ultrasn0w 0.9.1, select to install ultrasn0w, it will load to your iphone. just wait and your phone has been unlocked. Please turn of the 3g on setting.

yes you must update, if your iphone is factory unlock or carrier unlock, then you can go ahead and update to firmware version 3.1.2, blackrain is a jailbreaking tool for iphone with with firmware 3.1 and above. But if your phone is locked to a carrier, it is best for you not to update to the latest firmware. To be save, you just restore your phone with custom restore ipsw which is iPhone1_2_3.1_7C144_Custom_Restore.ipsw, by doing this custom restore method, your iphone version is update to 3.1, but your modem firmware is remain at 04.26.08. At this time only modem firmware 04.26.08 can be unlocked by using ultrasn0w. All iphone with modem firmware 05.11.07 only can jailbreak and no unlock.

[quote=hsk,Oct 14 2009, 12:24 AM]
i follow your instruction.i can jailbreak & install the ultrasn0w.then reboot.after reboot the iphone search the network for about 10 minutes then show no service...

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Go to setting>General>Network, than turn off enable 3G, you should get you signal

you're right, that is if your phone is 3g, but if your phone is 3gs, the firmware is iPhone2,1_3.1.2_7D11_Custom_Restore Firmware. May I remind you that there are 2 type of custom restore firmware, one if for activate (for locked iphone) and another one is not activate (for factory unlock or official carrier). So be careful when selecting what firmware you want to restore.