So I updated this iPhone 3G and now it won't pass the activation screen, it's not blacklisted because it was always mine and it won't even show on iTunes?
I could be wrong but I believe that's usually a hardware failure. I had something like that happen after I used Aptbackup in Cydia once on a 3GS. I took it to Apple and they replaced it under the warranty. Obviously you don't have a warranty though.