Ok, so I had to wipe out my 3GS and jailbreak it again. It was successfully jailbroken before I had to wipe it. I have ran redsn0w 0.8 about 5 times now and cydia still will not install.
Prior to wiping it out the first time I grabbed the files that I was suppose to in the %temp folder.
I put the phone back to factory settings (no restore from previous backup)
Downloaded a fresh copy of redsn0w and even tried other 3.0 ipsw's including my original one.
I am totally stumped here. Anyone run into this issue have a solution?