Fixed, please ignore.....

Originally Posted by ABuNeNe

Hi guys, I tried to update my iPhone 2G to 3.1.2. Everything was ok until I tried to restore a backup in iTunes.

During the restore, my iPhone suddenly shutdown and iTunes said it's cannot continue. My iPhone is unable to boot normally but I managed to get it into DFU mode.

Thinking it's like the tethered jailbreak for the 3GS with newer bootrom, I ran blackra1n again (possible mistake here). blackra1n started but after a few secs my iPhone shutdown. Got into DFU again, blackra1n automatically started and my iPhone shutdown again. I'm now stuck in this loop!

iTunes detects my iPhone in DFU mode but I can't get iTunes to restore as blackra1n automatically starts running after a few secs after getting into DFU.

Just to be clear, if you get any graphics on the screen at all, it is not DFU mode but instead recovery mode. DFU mode is a black screen, but the iPhone is still detected by iTunes.

Getting into DFU and Recovery mode.
http://www.hackint0sh.org/f137/54082.htm

You have a 2G iPhone, don't try techniques designed for 3GS or 3G, they generally won't work.

Make a copy of your iTunes backup, put that copy in a different directory as the default backup location will be overwritten later with a fresh backup. You may be able to selectively recover some of your files if you keep your current backup safe.

Put the iPhone into proper DFU mode.
http://www.hackint0sh.org/f137/54082.htm

Restore iPhone OS 3.1.2, jailbreak with blacksn0w (if you must, redsn0w and pwnagetool provide much better jailbreaks)

Set your iPhone up as new, do NOT restore from backup.