After following all the guides, I'm still unable to jailbreak my iPhone since wi-fi option grayed out.
I uploaded the .tiff file to the iPhone using iPHUC and tried to execute it via Safari as a local file - file:///e.tif.
Also tried to create an .html file and redirect it to the .tiff file but with no luck.
I tried to put the file in both '/' and '/var/root/Media/Sites/' but Safari tells me it could not find server (browse to: http://localhost/index.html and http://127.0.0.1/index.html)

what am I doing wrong???

OTB 1.1.2 (Week 48)
Downgraded to 1.1.1

I may be wrong but i think the tiff just holds the exploit which grabs another "package" of files that are executed to hack the phone. You will need this bin file locally too with the tiff pointed at it.

Anyone correct me or confirm?

thanks geebee but I am actually more concern about how to run the file locally. once i will be able to run an .html file locally via Safari I'll move forward to the bin file.

The main point of tiff exploit is to jailbreak the phone. Without jailbreaking, you don't have access to the root directory on the phone. Without root directory access, you can't install anything, such as the web server needed to establish a site on your phone.
On the other hand, if you can install the web server, you don't need the Tiff exploit. So there is no point to setup a local Tiff exploit.

Can someone show me the tiff and other files where can I download them because I can make a webserver on my computer and then just run the tiff file from my computer.
Is that possible?

Here is the link to the .tiff file:
http://jailbreak.toc2rta.com/e.tif

I'm able to upload files to wherever I want in my iPhone including the root directory but I'm not sure what do from there.

try file:///path/to/your/file instead of http://locahost ... because i guess you did not install a webserver on your phone.

Tried that but Safari says it can't open since it's a local file.

Its not just the tiff file there should be also some other files. You must install some kind of a browser to use them. I propose that the best solution is to install a webserver on your computer then just go with safari to your computer address and thats it

I don't think Safari will recognize the IP address of my computer via USB port... don't forget the damn wi-fi doesn't work