No panic! First you are not going to restore to older versions using this iTunes version (I assume you are using the latest).

Lets try some stuff first. For this you will be using the ORIGINAL firmware from Apple. The md5sum of it should be:

463e37446a342857737a1633470faf8d iPhone1,1_3.0_7A341_Restore.ipsw

Just make sure your firmware is not corrupted before we start. If it is (if the md5sum is different), download a new copy!

FORCED DFU MODE

1) Now, plug the iPhone to the PC/Mac and wait for the apple logo to appear ( the iphone is starting to boot)
2) Press and hold home+power until it boots
3) Right after the boot, count to 5 (5 seconds) and let go the power button (keep holding home)
4) Now you are in DFU. Try to restore it.


FORCED RECOVERY MODE

1) Plug the iPhone to the PC/Mac and wait for the apple logo to appear ( the iphone is starting to boot)
2) Press and hold home+power until it boots and keep holding until you see the recovery message poping in the computer screen.
4) Try to restore it.


Let me know if works.

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