I have an iPhone 3gs that was running ios 4.0.1 that I successfully untethered, jailbroke and unlocked. Unfortunately I chose to 'Erase all content" thinking that meant the removal of only my personal data and the IOS was lost. Rooky mistake, I know..

Now on startup the device does not get past the Apple logo and a frozen wheel and iTunes does not recognize the device unless I do the power button/home button thing and then iTunes wants to restore the IOS to 5.1, which I have heard is a no-no for being able to achieve an untethered unlock.

I see that I can download a wide array of IOS's from Limera1n, but which one should I download? Then, how do I get that IOS onto my iPhone? Do I need to jailbreak and unlock again, since my goal is to have an untethered unlocked jailbroken phone that I will be selling? Thanks very much.

As far as I know you will have to restore to IOS 5.1 unless you have saved your shsh on 4x cause Apple are only signing 5.1 at the moment.

Also remove any modifications you might have from a previous jailbreak to your host file cause it will cause an error on restore.

KennyLegend is correct. You will be unable to restore to a version of iOS other than 5.1 unless you have SHSH on file. Beyond that, iOS 5.0 and 5.0.1 CANNOT presently be restored (even with SHSH), though this is likely to change in the very near future as iH8sn0w has announced he has found an exploit in the apticket system allowing him to downgrade to iOS 5.x revisions. This is not publicly released yet, however.

Also, as KennyLegend mentioned, if you have any lines in your hosts file pointing to gs.apple.com, your restore will fail and you will be left with a bootlooped phone until you complete a restore properly with a clean hosts file.