I used redsn0w 0.9.4 to jaibreak a 2G (model A1203) iPhone. I did this without knowing anything about the phone other than it running 3.1.3_7E18 firmware. The phone was functioning properly with an invalid SIM but no Cydia so I thought it was clean. After the jailbreak, the "slide to unlock" became inoperable. The power off slide function works perfectly and the screen is in great shape. I've done jailbreaks many times before and this seemed to go routinely but this latest wrinkle has me stumped. What would happen if I restore the untampered firmware back to the iPhone with iTunes?

Nothing crazy will happen if you restore non-jailbroken firmware to the device -- that's actually how you 'unjailbreak' your phone, so you're safe to do so if you want to restore back. Since you're on a 2G, you don't have to worry about nearly as much as the newer phone models do.

You were correct to use redsn0w 0.9.4, however, if that continues to not work, you can try using Sn0wbreeze 3.1.3 to create the .IPSW.

I seem to recall that some users had problems with jailbreaks around the 3.1.3 time where it made the bottom 1/4th of their screen unresponsive. I thought that was a problem with Activator or Mobile Substrate, but it's been so long I truly just cannot remember.