I have a 1.1.2 OTB that I was getting the above error. The phone was used with an nextsim I believe. The owner accidentally dropped the next sim in the sim tray slot and removed it with 2 needles.
It turns out that one sim reading pin got broken off.
So this was the reason no sim card was recognized by the phone and why I couldn't jailbreak it.


Well next step is to try and solder a small piece just like that from an old nokia phone(quite similar pins) and let you know how that goes.
If that fails I'll ask the owner and probably order a new communications board to replace this one(since it also has the baseband upgraded to the one that comes with 1.1.3)

The baseband gets stored on the communications board right?

And an additional note. I found opening the antenna cover quite easy following the instructions on www.hackthatphone.com
I didn't have a quitar pick or any ipod opening tools, but i did have an AT&T sim card
That card worked perfect.I was struggling with a screw driver and really taking care not to make any dents or scratches(actually did some).
But sliding that card twice worked perfect.It makes a small scratch/cut down the card so you can actually use that card twice on each side until the cut is deep enough to make no difference.