I have the same problem, let me explain it in details. I have an iphone 4 GSM, 4.2.1, jailbroken with greenpoison RC6 and unlocked with gevey ultra. Ive created the custom 5.0.1 ipsw with redsnow, and tried to restore, and i got the same problems, first it popped up the 3194 when itunes was still extracting the software, so i tried with tinyumbrella, and did everything that the same fellas did here, unchecked the send to cydia thing, and nothing. So I started TSS server and tried, it worked, and itunes was restoring i had the apple logo and the bar, but when it was like 20 % error 10 popped up. Then I tried to close tinyumbrella as n1ckn4m3 suggested, and nothing, I deleted couple of lines of my original host file and nothing. Still error 3194. Im gonna post whats my host file was and witch lines i deleted here it goes:
HOST ORIGINAL FILE:
# Copyright (c) 1993-2009 Microsoft Corp.
# This is a sample HOSTS file used by Microsoft TCP/IP for Windows.
# This file contains the mappings of IP addresses to host names. Each
# entry should be kept on an individual line. The IP address should
# be placed in the first column followed by the corresponding host name.
# The IP address and the host name should be separated by at least one
# Additionally, comments (such as these) may be inserted on individual
# lines or following the machine name denoted by a '#' symbol.
# For example:
# 220.127.116.11 rhino.acme.com # source server
# 18.104.22.168 x.acme.com # x client host
DO i have to add something? Please help me out :/ now my iphone is stuck on the Itunes logo... And I still wanna update with no_bb firmware so i can unlock with gevey.
Forgot to mention that ive tried putting my device into pwned dfu, idk if i really managed to do it. The redsnow and ireb said i had it on pwned dfu, and still no restore... 3194 error...