You guys are correct, I had the beta and DFUed to 6.1.4 without erasing the content. I just logged onto my iCloud and sent an erase request (is this the same thing as erase all content and settings?). Hopefully this will solve the problem and allow the other person to activate the phone.
No that will not help him either, you sold him a phone that he will never be able to use without entering your info. So the least thing you should do for putting the buyer through all that is give him the login and password and after a he gets in and restores it and disables that feature you can change your password for your iTunes login.
◾In iOS 7, if Find my iPhone is enabled (Settings > iCloud -> Find my iPhone), it wont be possible to turn it off without entering the Apple ID password. This is to ensure that someone who has access to your iPhone, cannot disable it without your knowledge.
◾You also cant restore the device if Find my iPhone is enabled. iTunes will inform you that the device cannot be restored as Find my iPhone is on. So the only way to restore it is to first turn off Find my iPhone, which as we mentioned earlier, will prompt you to enter the Apple ID password.
◾If someone tries to erase all the content and settings from the device via the Settings app, he or she will be prompted to enter the Apple ID password.
◾You can restore the device by putting it in DFU or recovery mode when it is Lost mode, however after restoring your device, the person will be prompted to enter the Apple ID and password, so it wont be possible to use the device.
◾In iOS 7, if you remotely wipe the data on your lost or stolen device using Find my iPhone, you will still be able to display the custom message with your phone number on the Lock screen. iTunes will also display this message when you connect the device to a computer running iTunes.
◾If you are lucky to get your device back, you can reactive it by entering your Apple ID and password, and restore it using iCloud or iTunes if you had remotely wiped the data.