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Is that maybe a tethered Jailbreak on 4.2.1 or something, my iPhone 4 did that , i just needed to re-tether ..
 
what did u retether it with??

when i tried with redsnow it showed the pineapple and still rebooted to the same thing
 
Does itunes actually recognize that its in restore mode? if so, at which point during the restoring process does it reboot?
 
Does itunes actually recognize that its in restore mode? if so, at which point during the restoring process does it reboot?

yes it does it says it has found a phone in restore mode and it resets when i press restore and its goes thru the process but when it shows the apple logo with the status bar it reboots and doesnt start
 
Unless one of your buttons is broken DFU mode should be the key. Try, with the phone plugged into computer & iTunes closed, hold power plus home till phone reboots, keep holding both for exactly ten seconds, relese power button and hold home for another 10 seconds or until iTunes opens seeing the phone. Remember DFU mode has no logo on the screen.
 
i have tried everything from trying to restore in pwned dfu mode with
a custom firmware to using irecovery( iphone not found on it )

the guy told me before he gave it to me it worked fine it had cydia on it
and was jailbroken and unlocked

he reset it by pressing reset settings and phone content if it helps
 
Have you tried commenting out gs.apple.com in the hosts file at /etc/hosts before restoring?

I ran into a similar problem after jailbreaking and cydia was screwing up the itunes restore verification.
 
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