I'm about to go to work so I need to make this quick. I'll update it later. Here's a brief summary of what has been happening to me

-Updated phone to 5.0.1
-Ran Redsn0w and attempted to jailbreak
-went through the jailbreak process
-nothing happened. My home screen acted like it wasn't jailbroken and didn't recognize my T-mobile sim card.
-opened up iTunes and it automatically restored all my settings, apps,music, ect.
-I can now open up my phone like it is jailbroken but not unlocked yet
-Cydia is nowhere to be found
-iTunes is still syncing all my music.

Gotta go to work. Thanks for the help.

i got everything fixed, but I didn't realize ultrasn0w can't unlock it for T-mobile on 5.0.1 yet. Is there any word of when that will be possible, or is there a place I can check on that for updates?

It can, you just need to download the patched CommCenter from 5.0.0 and replace it. ultrasn0w does not yet work directly with the CommCenter from 5.0.1. aviegas and Wortel have some forum posts about this -- do a quick search for patched CommCenter or wortel and you'll find the threads.

I have looked into that, but I have also been recommended to go to the iPad baseband to unlock because my firmware (05.16.05) is totally unlockable. I'm not sure which one is a better, safer, or easier.

I have also been told to downgrade my firmware using sn0wbreeze (win) or pwnagetool (mac). All these options and processes are a little overwhelming and I'm not sure how to do any of them.

If you don't have any SHSH, you can't downgrade to 4.x -- so that's important to figure out. Without them, downgrading is off the table entirely. Use TinyUmbrella to see if saurik's server has any SHSH stored for you. Without that, the only choice would be to upgrade to the 06.15.00 baseband (since it's unlockable, but you will risk losing GPS, and future restores HAVE to be custom restores or the phone will bootloop, and YOU CAN NEVER UNDO THIS) and use the tethered/semi-tethered jailbreak for iOS 5.0.1.

Aren't the available SHSH options shown at the top of the homepage of Cydia? Mine shows " SHSH: iOS 4.0, 4.0.1, 4.0.2,4.1, 4.2.1r1, 4.3.5

Nothing seems to be coming up when I search to use TinyUmbrella on Cydia. I also can't seem to load Saurik's website on my browser.

Would waiting around for my BB to be unlockable be an option?

Yep, the available SHSH are shown in Cydia - so you should be good there. If you're having difficulty with TinyUmbrella saving them, check your hosts file and make sure to remove all lines that refer to gs.apple.com -- it's probably a hosts issue.

Waiting around is always an option, but people with your baseband have been waiting a long time and will probably continue waiting for a while. Since the iPhone 4S has a different baseband (and that's the only baseband they've announced that they've found an unlock exploit in), I expect they will work to perfect that before looking back on the iPhone 4...

Ok cool. I think I'm good to go on using TinyUmbrella, but I have 2 questions:

Where do I check my hosts file? All lines with gs.apple.com might already be removed, but I just wanted to make sure I was looking in the right place.

Do I need to use custom firmware or just download the one I need? I'm guessing I don't need custom firmware because that is used to preserve my BB which is unlockable, correct?

Depends whether you're Mac or PC. On PC you can find it in c:\windows\system32\drivers\etc\hosts
On mac, you find it in /private/etc/hosts

Correct, you would use a No_BB firmware to preserve an unlockable baseband through an update. Since your baseband is already hard locked, it's your call. Some people still prefer to keep older basebands in case future unlocks can unlock them but not newer ones, but it's ultimately up to you.

So my BB is unlockable no matter what I downgrade to?