Perhaps my search skills are lacking but I figured out how to resolve 3194 error when updating my jailbroken devices. Had nothing to so with the HOSTS file or antivirus.
I simply put the 6.1 IPSW files in the location where iTunes downloads them for each device, put the device in DFU mode, and hit restore when it discovered a device in recovery mode. It asked to recover and update and worked fine. Worked on 5 iPads and 2 iPhone 4S.
Just make sure you finish all the "setting up your iPad" prompts after recovery (and restore from your old backup) to get it ready to jailbreak.
I simply put the 6.1 IPSW files in the location where iTunes downloads them for each device, put the device in DFU mode, and hit restore when it discovered a device in recovery mode. It asked to recover and update and worked fine. Worked on 5 iPads and 2 iPhone 4S.
Just make sure you finish all the "setting up your iPad" prompts after recovery (and restore from your old backup) to get it ready to jailbreak.