You ask about how to fix a 16xx error, there are at least 10 different error codes that fall under 16xx and are commonly encountered. The solutions for each specific error can vary.
Please publish your restore log and a clear description of what you were trying to do. That is the FIRST step in finding a solution.
http://www.hackint0sh.org/f137/130802.htm
iREB is NOT a solution it is a workaround.
Are you using a custom IPSW (that you made yourself with pwnagetool 4.1 or 4.1.2), or an original IPSW (downloaded direct from Apple)
We won't support custom IPSW you "found" on the net. They are often the problem.
We won't support custom IPSW made by any version of sn0wbreeze. These *might* work for you, or they might not.
You speak about trying to "update" to 4.1, I do hope that you are not shift-clicking the "update" button in iTunes and then browsing to a custom IPSW. That simply won't work with a custom IPSW, it will only work with an original IPSW (which will also upgrade your baseband)
The most common non-custom IPSW cause for 1604 is problems with USB, the solution for this is explained on the Apple troubleshooting page.
Update and restore alert messages on iPhone, iPad, iPod touch and Apple TV (2nd generation)