"Erase all Content and Settings" not working

Hello,

I am wanting to sell my iPhone but before I do so, I would like to wipe it clean of all my information. I tried restoring it in iTunes but I kept getting an error 3004 or else it said it could not connect to the server (or something along the lines of that).

So I figured if that will not work, I will "erase all content and settings" I have attempted this twice now: the first time was for 3hrs, the second time was for 12hrs. When I press the button I just get a loading wheel sign, no logo, no loading bar. After it taking so long I rebooted my phone and all the same content was still there.

How do I fix this?!

iphone details:
3GS 8GB
version 4.3.5
modem firmware 05.16.02
jailbroken with redsn0w for mac

Your help would be greatly appreciated,
Thank you!

 

How do I DFU Restore? Like actually just go into DFU mode and click restore in iTunes?

 

I did it and I still am unable to restore. The message that pops up reads:
"The iPhone "iPhone" cannot be restored at this time because the iPhone software update server could not be contacted or is temporarily unavailable."
Is there anything I could possibly try out?

----------

How do I access my host files, and what is the content supposed to look like?