You had to quit iLiberty, cause jailbreak did not work even after 10 Minutes. iPhone restarts, scrolls text and end with looping "BSD Root: md0, major 2, minor 02". DFU restore the iPhone to 1.1.4 in iTunes and start from step 1. Instead of step 2 - 4 use the following steps:
You have to get the iphone out of the looping "BSD Root: md0, major 2, minor 02". To do so:
1. Disconnect iPhone from your PC/Mac if not done already.
2. Hold Power/Sleep and Home until the iPhone shuts down. Put it aside.
3. Start iTunes on your PC/Mac and make sure to have the latest version. If not, upgrade.
4. On the iPhone press Home button and keep holding it while connecting the iPhone to your PC/Mac.
5. Keep holding Home button until iTunes finds the iPhone in recovery mode. Restore to 1.1.4.