well, I used the software for the mac wit a 1.1.1 touch that was jailbroken about 3 times and had no issues. First plug in the touch and make sure you see it in iTunes. Then hold down the power and home keys untill it dissapears from itunes. When it is gone from iTunes release the power button but contiue to hold the home butolton. Itunes should say it is in recovery mode after a few seconds. Then option + click the restore button and you can select a ok ation on your mac that has a 1.1.1 update package. Then after its is 1.1.1 go to jailbreakme.com and jb it. Then try the terminal script again, it should work =)
Edit: oh and after you run the thing in terminal make sure you turn your touch off before trying the 1.1.3 soft install thing in installer or you will get an error.